A fundamental analyst is likely to use which of the following in forecasting exchange rates?

Question

Quizplus · Accepted Answer

A fundamental analyst would consider all of the factors listed (forward exchange rates, inflation differentials, nominal interest rate differentials, and real interest rate differentials) in forecasting exchange rates. Forward exchange rates provide information about expected future exchange rates, while inflation differentials and nominal interest rate differentials affect the supply and demand of currencies in different countries. Real interest rate differentials reflect the relative returns on investments in different currencies, and can therefore affect the flow of capital between countries and impact exchange rates.

A Fundamental Analyst Is Likely to Use Which of the Following