If a foreign country's interest rate is similar to the UK rate, the forward rate premium or discount will be Close to zero, meaning that the forward rate and spot rate will provide exchange rate forecasts.
A forward rate is an interest rate that is relevant to a future financial transaction. To estimate the future interest rate that equals the overall return of a longer-term investment with a strategy of rolling over a shorter-term investment, forward rates are derived from the spot rate and adjusted for the cost of carrying.
The phrase may also refer to the interest rate on a future financial obligation, such as a loan payment.
The forward rate stated in an agreement is a contractual commitment that all parties must uphold.
Fast forward six months. If the market spot rate is lower for fresh six-month investment,
To learn more about forwarding rate from the given link:
https://brainly.com/question/14029507
#SPJ4
