Finance



Finance Q1. Why do you think currencies of countries with high inflation rates tend to have forward discounts?

In economics the term inflation indicates a general and continuous increase in the prices of goods and services in a given period of time that generates a decrease in the purchasing power of the currency. With rising prices, each unit of currency will buy less goods and services; as a result, inflation is also an erosion of purchasing power (Madura 2011, 211-240).

For example, an investor is in a situation of inflation and he has the choice to invest his Inflation $ for ...