If the peso is traded at a forward discount relative to the U.S. dollar, then the U.S. dollar is also trading at a discount relative to the peso.

Question

Quizplus · Accepted Answer

If the peso is trading at a forward discount relative to the U.S. dollar, it means that the peso is expected to weaken in the future compared to the U.S. dollar. Therefore, the U.S. dollar is actually trading at a premium relative to the peso, not at a discount.

If the Peso Is Traded at a Forward Discount Relative