Since exchange rate forecasts are not always accurate, a probability distribution of possible exchange rates may be preferable to a single point estimate.

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Exchange rate forecasts are subject to numerous factors that can influence their accuracy, such as economic conditions, political events, and global market trends. As a result, a probability distribution of possible exchange rates is often a more reliable way to gauge potential outcomes than a single point estimate. A probability distribution considers a range of possible outcomes and assigns a likelihood to each, providing a more nuanced picture of the potential risks and opportunities associated with a particular currency.

Since Exchange Rate Forecasts Are Not Always Accurate, a Probability