Impact of Currency Change on Business Essay
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?