Are the forward points significantly affected by changes in the spot rate?
A) Never
B) For very large movements and longer terms
C) Always
D) Spot is the principal influence

Question

Quizplus · Accepted Answer

Forward points (also known as swap points) are influenced by the difference between interest rates in two currencies, as well as market expectations for exchange rate movements. However, changes in the spot rate can also have an impact on forward points, particularly for larger movements and longer time frames. Therefore, while spot rate is not the principal influence on forward points, it can still play a significant role in their calculation.

Are the Forward Points Significantly Affected by Changes in the Spot