152 CHAPTER 4. UNDERSTANDING FORWARD EXCHANGE RATES FOR CURRENCY
Forward currency contracts have been around for centuries. A more recent in-
strument is the forward or futures contract on interest rates. Since forward interest
contracts are not intrinsically ‘international’ and many readers may already know
them from other sources, I stuff them into appendices, but if they new to you be
warned that we are going to use them further on in this book. A key insight is that
interest rates (spot and forward interest rates, and “yields at par”) are all linked by
arbitrage. Forward interest rates in various currencies are likewise linked through
the forward markets.