Tuesday, January 08, 2008

Comeback for the USD?

The USD has been gaining strength vs. the euro, and is now selling at a .54% one-year forward premium (spot rate of $1.4718/EUR and one-year forward rate of $1.4639/EUR), the highest one-year forward premium for the dollar (vs. euro) in at least several years.


At 1/08/2008 9:20 AM, Anonymous Anonymous said...

Isn't the 1-year forward premium a simple function of the relative one year interest rates in the dollar and euro markets? Forward premiums don't say anything about the relative value of the dollar to the euro that is not reflected in the spot rates, right?

At 1/08/2008 9:26 AM, Anonymous Anonymous said...

Total noob here but at a 0.54% increase per year how long until the dollar trades at the same rate it did in say 2000?


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