Forward exchange rates

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Forward exchange rates

From Neil O'Hara

CompuServe ID: [71175,1304]

The following equation calculates forward exchange rates:

{Forward exchange rates|

!SPOT = units of f/x per US$ today;

FORINT = interest rate in f/x;

USINT = interest rate in US$;

FWDATE = date f/x contract matures

FWDEX = forward exchange rate!

SPOT*(1-(((FORINT-USINT)/

100)*DDAYS(CDATE,FWDATE,1)/

365))=FWDEX

}

In either case the ability to backsolve for different variables is a big help, depending whether I'm trying to interpret current market conditions or set parameters for setting up a position.

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