2 Newbie questions

Beginner Questions
1

Hi all,

COuld you please advise… ?

  1. Forward discount: I want to sell USD against SGD in a forward deal. USD/SGD is quoted in the forward discount. Does this mean the interest rate for SGD is higher than USD ?45

  2. When the the forward points is quoted as par and another forward point is quoted as +0.2, but both quotes give the same all in rate, which one quote is better for me ? i.e. (a) 1.248 + 0.2 (b) 1.245
    From accounting point of view, does this affect P&L ?

thanks.

2

Whichever currencies interest rate is higher… That’s the one you need to buy to get positive interest… If you sell the higher yielding currency , you have to pay interest… Yes this effects your profits

3

Hi Banker 928,

THanks.

So in Question 1, sell USD against SGD in a forward deal. USD/SGD is quoted in the forward discount. Does this mean the interest rate for USD is higher ?

4

The interest rate of usd is .25% … I do not know what the interest rate of Singapore dollar is as I don’t trade the pair… A quick google search would find out for you though.