Question

Based on the following information, the value of the U.S. dollar will _____ with respect to the yen and will _____ with respect to the Canadian dollar. Cur./Cur. per USD Japan yen/115.77 6-months forward/112.80 Canada dollar/1.1379 3-months forward/1.1339

Answer 1

Based on the provided information:

1. The 6-month forward rate for the Japanese yen (JPY) is 112.80 JPY per USD, which is less than the current rate of 115.77 JPY per USD. This means that in the forward market, the U.S. dollar (USD) is expected to strengthen against the Japanese yen over the next 6 months. So, the value of the U.S. dollar will appreciate with respect to the yen.

2. The 3-month forward rate for the Canadian dollar (CAD) is 1.1339 CAD per USD, which is less than the current rate of 1.1379 CAD per USD. This also indicates that in the forward market, the U.S. dollar is expected to strengthen against the Canadian dollar over the next 3 months. So, the value of the U.S. dollar will appreciate with respect to the Canadian dollar.

In summary, the value of the U.S. dollar will appreciate with respect to the yen and the Canadian dollar based on the forward exchange rates provided.