The current indirect exchange rate is 0.849 CAD per USD.The anticipated annual inflation rate is 2% in the United States and 3% in Canada.What is the forward exchange rate?

Question

Quizplus · Accepted Answer

The forward exchange rate can be calculated using the formula: Forward Rate = Spot Rate * (1 + Inflation Rate of Domestic Country) / (1 + Inflation Rate of Foreign Country). Here, it is 0.849 * (1 + 0.03) / (1 + 0.02) = 0.857 CAD per USD.

The Current Indirect Exchange Rate Is 0