The premium or discount on forward currency exchange rates between any two countries is visually obvious when you plot the interest rates of each country on the same yield curve. The currency of the country with the higher yield curve should be selling at a forward discount.

Question

Quizplus · Accepted Answer

The statement is true. When plotted on a yield curve, the interest rates of each country can show the premiums or discounts on forward currency exchange rates. The currency of the country with the higher yield curve should be selling at a forward discount.

The Premium or Discount on Forward Currency Exchange Rates Between