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On the value of free foreign‐exchange forecasts
Author(s) -
Ursprung Heinrich W.
Publication year - 1987
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090080210
Subject(s) - benchmark (surveying) , value (mathematics) , economics , foreign exchange , exchange rate , econometrics , monetary economics , financial economics , mathematics , statistics , geodesy , geography
The objective of this paper is to assess the value of free foreign‐exchange forecasts. Taking the exchange‐rate projections published by Lloyds Bank as an example, it is shown that there is no reason to assume that these projections consistently outperform the most easily available benchmark, the current spot exchange rate. Moreover, the returns to speculative investment based on these projections seem to be, at best, insignificant. The value of such forecasts must, therefore, be regarded as negligible.