#CurrencyPairPrediction Interest Rate Parity (IRP) theory in USD/CHF forecasting suggests that the difference in interest rates between two countries (in this case, the US and Switzerland) will be reflected in the exchange rate between their currencies. The theory assumes that capital is mobile, and investors will seek to take advantage of differences in interest rates between countries. In the context of USD/CHF, if US interest rates are higher than Swiss rates, the USD should appreciate against the CHF over time, as investors will move their capital into the US to take advantage of the higher returns. Conversely, if Swiss rates are higher, the CHF should appreciate against the USD. The formula for IRP is: Where: = Spot exchange rate at time t = Forward exchange rate at time t = US interest rate = Swiss interest rate This theory assumes no transaction costs and that markets are efficient, and is often used for predicting short-term exchange rate movements.