The condition stating that the interest rate differential between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate is called:

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Interest rate parity is a theory that suggests the difference in interest rates between two countries is equal to the difference between the forward exchange rate and the spot exchange rate. This condition helps in understanding how interest rates and exchange rates are related and ensures no arbitrage opportunities exist due to interest rate differentials.

The Condition Stating That the Interest Rate Differential Between Two