change in the forward premium over time assume that interest rate parity exists and 1554785

Change in the Forward Premium over Time Assume that interest rate parity exists and will continue to exist. As of today, the 1-year interest rate of Singapore is 4 percent versus 7 percent in the United States. The Singapore central bank is expected to decrease interest rates in the future so that as of December 1, you expect that the 1-year interest rate in Singapore will be 2 percent. The U.S. interest rate is not expected to change over time. Based on the information, explain how the forward premium (or discount) is expected to change by December