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Abstract

Hundreds of studies have always shown that the forward premium is a biased predictor of the future change in the spot exchange rates; they have all tested major currencies with the exception of a recent research that has been undertaken in 2010 by Frankel and Poonawala and which instigates us to launch this work. The aim of this study is to give an extra proof to these two researchers' (2010) findings; for this reason, we try to check if the forward premium bias tends to be less pronounced for emergent market currencies for four-year span from 2004 to 2008. This research is crown by key results showing that the forward premium bias is not doomed to disappearance but it is less severe than it was commonly revealed in previous studies. These results are perfectly in line with those obtained by Frankel and Poonawala (2010).

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