Suppose that the Japanese yen is selling at a forward discount in the forward-exchange market. This implies that most likely

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When a currency is selling at a forward discount in the forward-exchange market, it typically means that the interest rates are higher in the country of that currency (in this case, Japan) compared to the country it is being compared with (in this case, the United States). This is because of the interest rate parity, which suggests that the difference in interest rates between two countries will be equal to the differential between the forward exchange rate and the spot exchange rate.

Suppose That the Japanese Yen Is Selling at a Forward