Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/191654 
Authors: 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 17.04
Publisher: 
Swiss National Bank, Study Center Gerzensee, Gerzensee
Abstract: 
This paper assesses the uncovered interest parity (UIP) condition by means of Indian government bonds during the 1869 to 1906 period. As emphasised by Irving Fisher, interest and exchange rates between Britain and India from that period concur closely with the theoretical assumptions of UIP since (i.) India issued bonds in different currencies (rupees and sterling) (ii.) these bonds were simultaneously traded in the London financial market, and (iii.) subject to negligible regulation and default risks. As long as the Indian currency system was stable, a close correlation arises indeed between sterling-to-rupee interest rate differences and exchange rate changes.
Subjects: 
India
Irving Fisher
Silver currency
Uncovered Interest Parity
UIP Puzzle
JEL: 
F31
N13
N23
Document Type: 
Working Paper

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