If a currency's forward price in U. S. dollars is lower than the spot price, interest rates are higher in the foreign country than they are in the U.S.

Question

Quizplus · Accepted Answer

This situation suggests that the foreign currency is expected to depreciate against the U.S. dollar, which typically occurs when the foreign country has higher interest rates compared to the U.S., influencing the forward price to be lower than the spot price.

If a Currency's Forward Price in U