Marco99’s Weblog

Interest arbitrage (Interest Arbitrage), also known as arbitrage is that the two investors in accordance with the country’s financial market, the level of short-term interest rates high and low, from countries with lower interest rates to borrow funds, will be in the spot foreign exchange market on the interest rate change the higher the currency of the country, and in that country for investment, or directly from the free funds transferred to countries with lower interest rates higher interest rates on investments with the countries in order to earn an income margin transactions. According to the  Stock Exchange of arbitrage of forex involved in the crediting risk, arbitrage can be divided into not crediting arbitrage (Uncovered Interest Arbitrage), and crediting arbitrage (Covered Interest Arbitrage).