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Sfm doubt
In international finance, if the spot rate is given as, say, euro 1.196-1.197/sterling, and the forward prrmium is given as 0.66-.55 euro cents, is the premium amount supposed to be added to the spot rate to arrive the forward or as the amount of premium is shown in descending order, be deducted to arrive at the forward rate. please help
Replies (1)
If premium or discount is not mentioned, the rules for adjustment are:
RULE 1: Swap points are Low / High - Add
RULE 2: Swap points are High / Low - Less
If premium or discount is mentioned:
RULE 3: Currency is at Premium - Add
RULE 4 :Currency is at Discount - Less
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