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A currency whose debt market is characterized by interest rates higher than the rate prevailing in the investor's or liability manager's reference (domestic) currency. For many years, sterling was a discount currency with respect to most of the world's major currencies. High interest rates in sterling denominated instruments and low forward exchange rates implicitly predicted that a holder of pounds would be able to buy fewer dollars or D-marks at a future date than he could buy in the spot market. See also Interest Rate Parity, Premium Currency.
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