The spot AUD/USD rate is 0.7476 The 3 month AUD/USD FX swap rate is -8 FX points Determine the 3 month outright FEC rate for AUD/USD. (Display your answer to 4 decimal places)
Question
The spot AUD/USD rate is 0.7476 The 3 month AUD/USD FX swap rate is -8 FX points Determine the 3 month outright FEC rate for AUD/USD. (Display your answer to 4 decimal places)
Solution
To calculate the 3 month outright FEC rate for AUD/USD, you need to follow these steps:
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Convert the FX swap rate from points to a decimal. FX points are typically quoted as the difference in pips (percentage in point) between the spot rate and the forward rate. In this case, -8 FX points is equivalent to -0.0008.
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Add the FX swap rate to the spot rate. The formula for calculating the forward exchange rate is: Forward Rate = Spot Rate + Swap Points. In this case, the calculation would be: 0.7476 (Spot Rate) - 0.0008 (Swap Points) = 0.7468.
So, the 3 month outright FEC rate for AUD/USD is 0.7468.
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