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Does speculation play any role in determining the forward exchange rate?

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  • Imad Moosa
  • Razzaque Bhatti

Abstract

This paper examines the role of spot and forward speculation in determining the forward exchange rate. The evidence reveals that neither spot nor forward speculation plays any role in determining the forward exchange rate in three currency combinations, lending support to covered interest parity. This finding is plausible as financial deregulation has created an environment in which deviations from CIP pale into insignificance even in domestic money markets

Suggested Citation

  • Imad Moosa & Razzaque Bhatti, 1997. "Does speculation play any role in determining the forward exchange rate?," Applied Financial Economics, Taylor & Francis Journals, vol. 7(6), pages 611-617.
    • Handle: RePEc:taf:apfiec:v:7:y:1997:i:6:p:611-617
    DOI: 10.1080/758533853
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    References listed on IDEAS

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