interest rate parity and PPP

does either of these hold in the short-run? swore a schweser question said one of them did, but can’t remember

Interest rate parity

bpdulog Wrote: ------------------------------------------------------- > Interest rate parity in the long run only no?

PPP works only long term, so base only long term currency market expectations using PPP. Currency futures can be expected to incorporate IRP at any instance-- so while underlying rates will move slowly overtime, the IRP effects are observable instantly via futures. You could call this “IRP holds in the short term”

IRP – generally short term PPP – generally longer term