International parity conditions approach Do international parity conditions hold in the real world? Empirical evidence suggests that the forward rate is a biased predictor of the future exchange rate. We do not observe large and persistent 分 deviations from the interest rate parity Covered interest arbitrage is rare in practice.International parity conditions approach Do international parity conditions hold in the real world? Empirical evidence suggests that the forward rate is a biased predictor of the future exchange rate. We do not observe large and persistent deviations from the interest rate parity. Covered interest arbitrage is rare in practice