Assume a currency is less expensive in the forward market than in the spot market relative to the U.S.dollar.When this occurs,the currency is said to be selling at

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When a currency is less expensive in the forward market than in the spot market relative to the U.S. dollar, it is said to be selling at a discount relative to the dollar. This means that investors can buy the currency at a lower price in the forward market and then sell it for a higher price in the spot market, thus making a profit. This situation is known as forward discount arbitrage.

Assume a Currency Is Less Expensive in the Forward Market