Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Interest rate parity (IRP) is the fundamental ...

If you’re involved in trading, investing, business planning or international finance, you must know the difference between spot rates and forward rates. Understanding the difference plays a big role ...

Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a ...

A spot rate is the current market price at which a stock, bond, commodity, or currency can be purchased or sold. A forward rate or forward price is a price set in advance between a buyer and a seller ...

This paper examines the Post Keynesian proposition that the forward rate is determined by covered interest parity and that it is not a predictor of the future spot rate, as suggested by the unbiased ...

The U.S. dollar has seen some remarkable swings against major currencies recently. For example, over most of 2005, it gained nearly 18% against the yen and 13% against the euro, while between March ...

Currency hedging mitigates the additional volatility that exchange rates impose on foreign assets. But these currency-hedged strategies bear additional costs and can have tax implications. Our recent ...

It’s a huge business: Foreign exchange transactions using the tools of hedging amount to trillions of dollars a day and outstrip regular day-to-day currency trading. Hedging comes in as companies seek ...

This paper applies the Phillips and Hansen estimation and inference procedures to re-examine the hypothesis that the forward exchange rate is an unbiased predictor of the future spot exchange rate.

We offer a unifying empirical model of covered and uncovered currency premia, interest rates and spot and forward exchange rates, both in the cross section and time series of currencies. We find that ...