Dollar is trading at a 2. Therefore, the dollar should appreciate. Dollars per national currency unit.
Forward exchange rate
It costs less for us, in U. In which case I would say as verified by your equation that the dollar is at a forward premium. Even now we are all in disagreement. Mr-Z just said that the dollar is at a discount, meaning it will appreciate. This notation is stupid.
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We can all easily agree that the dollar will appreciate, so when a currency is set to appreciate by the forward market, does that mean it is trading at a premium or discount? This stupid nuance is frustrating me.
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Lets forget about the numbers and just try to agree on this concept —. The forward premium or discount just tell us if the currency forward is traded at a premium or discount relative to the spot exchange rate. In case of Q6, the dollar could depreciate or depreciate.
Now since Forward Euro is less than Spot Euro, it is selling at a discount depreciating. From the data given below, let us calculate forward premium or discount, as it is applicable in the case: INR per British Pound.
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Premium with respect to Bid Price: Spot rates are higher than the forward rates in the case of 3 months forward contract. Hence, forward rates are at a discount.
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