Currency Change Impacts Business & Monitoring Central Bank Intervention Discussion
Accessing Futures Quotes
Go to a web site that provides quotations for currency futures. Determine the prevailing futures price of the main foreign currency for your business. Go to a web site that provides exchange rate quotations and determine the prevailing spot rate. What is the discount or premium of the futures price? (see equation below)
Futures price website:
Currency (spot rate) website:
Make sure all quotes are made relative to the U.S. Dollar. Calculate the premium (positive result) or discount (negative result):
(Futures price – Spot rate)/Spot rate
Monitoring Central Bank Intervention
How can your business be affected if the Fed attempts to strengthen the dollar in the foreign exchange market?
If the Fed decides to weaken the dollar, how will your business be affected?
How can indirect central bank intervention affect your business even if there is no impact on exchange rates?