According to the efficient market view for forecasting exchange rates,forward exchange rates are perfect predictors of future exchange rates.

Question

Quizplus · Accepted Answer

According to the efficient market view, forward exchange rates are the best predictors of future exchange rates because they already incorporate all available information including market expectations for future interest rates, inflation rates, and geopolitical events. Therefore, the efficient market view suggests that it is extremely difficult if not impossible to consistently outperform the forward exchange rate in forecasting future exchange rates.

According to the Efficient Market View for Forecasting Exchange Rates,forward