Evaluating the Future Exchange Rate

Examine the trend of spot exchange rate and future exchange rate. Do you find any links? Identify whether the future exchange rate includes a discount or premium for each quarterly period (total 20 quarters)? Present your result in a table and a graph. Note that while forward rate and future rate are not the same, you can use these terms interchangeably for this assignment for reasons mentioned earlier.

0. Future Exchange Rate [200 words]

   • Key long-term trend

   • Spot vs future rate.

   • Premium or discount

   • Economic, political, regulatory policy explanations [10 MARKS]

should use the future exchange rate to examine the trend and determine how it diverges from the spot rate.

Identifying any discount or premium for each quarterly/monthly future exchange rate and linking the policy measures regulatory, economic, and political - are key in explaining whether the premium or discount is justified or not.

The use of charts, graphs, and tables is also important.