Suppose you have some savings and two tempting offers: a standard bank account at home paying 3 %, or an account in London paying 5 %. At first glance, the British account looks better. But there is a catch—your money will be in pounds, and when you eventually change it back to your home currency, the exchange rate might have changed. This chapter is about solving that puzzle. It gives you a simple but powerful tool—the interest parity condition—that shows how exchange rates, interest rates, and market expectations all snap together to make the financial world balance.