Exchange Rate Quotations-Contβd οΌ Forward exchange rate quotations are either at a premium or discount relative to the spot exchange rate, i.e. the quoted currency is either stronger or weaker in the forward market. The premium/discount for the denominator (quoted) currency is π π = πΉβπ π Γ 100% When π π is positive, the denominator currency is at a premium in the forward market, thus it is stronger. When π π is negative, the denominator currency is at a discount in the forward market, thus it is weaker. οΌ The premium/discount for the numerator (quotation) currency is π π = πβπΉ πΉ Γ 100% When π π is positive, the numerator currency is at a premium in the forward market, thus it is stronger. When π π is negative, the numerator currency is at a discount in the forward market, thus it is weaker. NB The premium/discount on the denominator currency and the discount/premium on the numerator currency are not equal in percentage terms.
