Spot-futuresparityeorem is a management science and technology term published by the National Committee for the Examination and Approval of Science and Technology Terminology in 20 16.

The description of the correct theoretical relationship between spot and futures prices, contrary to parity, will bring arbitrage opportunities.

The proof of interest rate parity is given by using the principle of no arbitrage. Suppose the domestic interest rate is I, the foreign interest rate is i*, the spot exchange rate is S (direct quotation) and the forward exchange rate is F.

If an investor invests in China with 1 unit of domestic currency, the maturity income is (1+i); If investors choose to invest overseas, they must first convert 1 unit local currency into 1/S foreign currency, and then invest, and the maturity income is (1+I *)/s; If it is converted according to the agreed forward exchange rate f, the functional currency (1+i*)F/S can be recovered.

Investors compare their investment returns in these two countries to determine the investment direction. if( 1+I)>； (1+i*)F/S, capital will be transferred from abroad to China, so the spot exchange rate of local currency will rise, the forward exchange rate will fall, and the foreign exchange rate will change in the opposite direction. If ( 1+i)