Covered Interest Rate Parity (CIRP) Explained | CFA Level 2 Economics

Covered Interest Rate Parity (CIRP) is a fundamental concept in CFA Level 2 Economics and is essential for understanding FX forward pricing. In this video, we explain how interest rate differentials determine forward exchange rates. In this lesson, you’ll learn: ✅ What Covered Interest Rate Parity (CIRP) means in FX markets ✅ How the FX forward price is determined by the interest rate differential ✅ Why a higher-yielding currency must trade at a forward discount ✅ How CIRP eliminates arbitrage opportunities in currency markets This explanation is taken from our CFA Level 2 on-demand course, where foreign exchange concepts are taught with exam focus and clear intuition. 📚 Gain full access to my CFA Level 1 tuition and revision course at https://www.stoynov.co.uk. 📚 Due to popular demand, we are now also expanding into CFA Level 2. Find the latest uploads on our website. LinkedIn:   / mstoynov   CFA 1 Newsletter: https://www.stoynov.co.uk/newsletter #interestrateparity #cfaeconomics #cfalevel2 #cfaprep #cfacourse