Definitions for "Interest rate differential"
The spread between two different facilities or between spot and forward rates. (An indicator of future changes in the spot exchange rate). Français: Différence entre les taux d’intérêt Español: Diferencial de los tipos de interés
The difference in yield between two comparable instruments denominated in different currencies. Used in forward foreign exchange pricing.
In FX trading, interest rate charges are determined by the difference between the interest rate on the base currency less the interest rate on quote currency. Interest rates are only paid on positions held over night.