According to The National Post, the spot exchange rate for the Euro is Euro 1 = $0.63. The six-month forward exchange rate is Euro 1 = $0.67. Based on these quotes, the Euro is selling at a premium relative to the dollar, and the dollar is selling at a discount relative to the Euro.

Question

Quizplus · Accepted Answer

The Euro is considered to be selling at a premium relative to the dollar because the forward exchange rate (Euro 1 = $0.67) is higher than the spot exchange rate (Euro 1 = $0.63), indicating that it will cost more dollars to buy euros in the future. Conversely, this means the dollar is selling at a discount relative to the Euro, as it will decrease in value compared to the Euro in the future based on these rates.

According to the National Post, the Spot Exchange Rate for the Euro