Do you think that us firms can accurately forecast

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Reference no: EM13246018

The value of each Latin American currency relative to the dollar is dictated by supply and demand conditions between that currency and the dollar the values of Latin American currencies have generally declined substantially against the dollar over time. Most of these countries have high inflation rates, and high interest rates. The data on inflation rates, economic growth, and other economic indicators are subject to error, as limited resources are used to compile this data.

a) If the forward rate is used as a market -based forecast, will this rate result in a forecast of appreciation, depreciation or no change in any particular Latin American currency? Explain

b) If technical forecasting is used, will this result in a forecast of appreciation, depreciation, or no change in the values of a specific Latin American currency ?

c) Do you think that US firms can accurately forecast the future values of Latin American currencies ?

Reference no: EM13246018

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