Forward discount

Forward discount

A currency trades at a forward discount when its forward price is lower than its spot price.

Forward Discount

In currency trading, a situation in which the forward price for the currency is less than the spot price. A forward discount occurs when the market expects the currency to depreciate over time. It is important to note, however, that this does not always actually happen.
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References in periodicals archive ?
1996: The forward discount anomaly and the risk premium: A survey of recent evidence.
Tables 2A-2B show monthly statistics for country political risk, economic and financial risk, forward discount and excess returns.
Within the emerging markets group, Argentina, Brazil, Turkey, Egypt, Romania, Mexico and Hungary have the highest forward discounts and excess returns.
Engel, Charles (1996) The Forward Discount Anomaly and the Risk Premium: A Survey of Recent Evidence, in Journal of Empirical Finance, vol.
This strategy involves selling currencies forward that are at a forward premium and buying currencies forward that are at a forward discount.
Hedge effectiveness is assessed by comparing the change in the value of the derivative attributable to changes in spot rates, excluding any changes in forward discount or premium, with the change in the value of the hedged item.
Interest Rate Data Source: CITIBASE data tape Series: 1-month certificate of deposit rate Mexican Interest Rate Data Source: Subdireccion de Investigacion Economica, Indicadores Economicos Series: 1-month certificate of deposit rate Forward Discount Rate Data Source: Data Resources Inc.
Rational Inattention: A Solution to the Forward Discount Puzzle" Discussant: Nelson Mark, University of Notre Dame and NBER
While the forward discount premium puzzle links different financial asset prices, the other great unsolved problem of international finance is "home market bias" in asset stocks.
Royal Jordanian adds more luxury to the services it offers to its economy class passengers through the one-time Lounge Access Voucher and the Lounge Pass for multiple trips, enabling its customers to experience the comfort and relaxing ambiance of the Crown Lounge at super low prices, said Pichler, adding that RJ will continue putting forward discounts and offers on tickets to the different destinations on its global network throughout 2018.
The forward discounts at which Gulf currencies are traded against the US dollar have recently increased but are still low at around two per cent, implying no devaluation expectations that could put pressure on reserves.

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