So I want to think about a situation. Okay, where a bank is asked to make a yen loan. But this bank does not have access to yen funding, okay? It has access to dollar funding. Okay. And let's take time out of it. So let's say it has access to, and it, it does fund it in the six month euro dollar market. So for this, for this bank here, their problem is that not time, everything is matched up in time. That's all fine. Okay? Their problem is they're not matched up in currency. And again, there's derivative markets out there, okay, forward, forward exchange contracts, okay, that help you line things up in time. You can get rid of this foreign exchange exposure, this foreign exchange risk exposure. But what I'm going to show you is how you could do it with a swap of IOUs, okay, with another bank. How would you get rid of it with a swap of IOUs? You would get rid of it by swapping a dollar deposit, for six months for a yen deposit, for six months. With somebody else over here who takes the other side of that yen deposit for six months. Dollar deposit, for six months. Okay? This is a swap of values. We do this swap at the current spot rate. Okay? And so what's, what happens then when all this matures, okay? This yen deposit, there's an interest rate associated with this. So let's not, let's, let's not put an f there and be mysterious about this. Now we know what we're going to do in the logic of what we're going to do. Let's just use the same logic we used over there. Okay. There's an interest rate on this, we'll use our star there, for a six-month interest rate in Yen. So if you added a yen deposit, here's the going interest rate in the, in the euro-yen market, which is quoted every day in the FT. Okay. And there's, and there's a deposit rate here, too. And we'll use that without a star, okay, because the dollar is special, okay. It's the domestic currency for everyone. It's the world funding currency here. And the same over here. This is 1 plus r star is going to be the interest rate, and this is going to be the interest rate here. And now, I'm going to, suggest to you another arbitrage condition, here. Okay? Let us say that we had, that this was for one dollar, to make it easy, okay? So, if we have this arrangement here, okay? At the end of six months we're going to have 1 plus r, 06 dollars here, okay? At the end of six months, well how many yen did we have? Well, we, we, we first exchanged our dollars into yen at the current spot exchange rate. Call that the spot exchange rate and we're quoting rates as yen over dollars. Okay. So maybe that's like a 100 yen per dollar. That's the order of magnitude you know that yen, yen are more like pennies. Okay. So if we have one dollar, we change them to this many yen, and so at the end of six months, we're going to have 1 plus r star, okay, yen. So what is hapenning, okay? At the end of 6 months, I gotta pay that many yen. Okay? And it's a liability, okay? And I'm going to receive from my counter party there that many dollars. I gotta pay this many yen, I gotta receive this many dollars. There's an implicit exchange rate there. Right? I'm paying yen, I'm getting dollars. What's the exchange rate that would lock, that I could lock in today with this balance sheet structure? That's the forward rate. That's the forward exchange rate. And, it's right here, and we call it F6. Okay? And it has to be equal to them. >> [COUGH] >> F6 because it's the forward rate for six months from now, okay? This is called covered interest parity. The same logic applies there, as applies here. That these things basically, are, are almost definitions of these forward rates. This is the forward interest rate, okay? This is the forward exchange rate. And they sort of have to be that. Because these are market interest rates. You can roll your own by, by going long and short existing instruments. And if you can roll your own, then, then the, then the outright forward has to be the same price. Otherwise, there's an arbitrage, in both cases.