Forecasting Forex Exchange Rates OT Flashcards
1
Q
Interest and forex?
A
One coutnry pays higher itnerest, buy that currency to get more interest
2
Q
Balance of payments?
A
How much we’re importing and exporting from a country
2
Q
What is PPP?
A
Exchange rate changes to keep prices equivalent
3
Q
S_0
A
Spot rate now
4
Q
S_1
A
Spot rate in 1 year
5
Q
H_B?
A
Base country inflation
6
Q
$/£
A
£ is the base country
7
Q
H_C?
A
Other country inflation
8
Q
What is the fisher effect?
A
If interest rates go up and down, the inflation rate goes up and down
9
Q
If I’m forecasting a future exchange rate?
A
Use PPP!
