oussama94
05-28-2017, 23:54
if U.S. interest rates are 3 percent and Japanese interest
rates are 1 percent, then the U.S. dollar should depreciate against the
Japanese yen by 2 percent in order to prevent riskless arbitrage. This future
exchange rate is reflected into the forward exchange rate stated today. In
our example, the forward exchange rate of the dollar is said to be at discount
because it buys fewer Japanese yen in the forward rate than it does
in the spot rate. The yen is said to be at a premium.
rates are 1 percent, then the U.S. dollar should depreciate against the
Japanese yen by 2 percent in order to prevent riskless arbitrage. This future
exchange rate is reflected into the forward exchange rate stated today. In
our example, the forward exchange rate of the dollar is said to be at discount
because it buys fewer Japanese yen in the forward rate than it does
in the spot rate. The yen is said to be at a premium.