Question regarding forwards/prem and discounts

Discussion in 'Forex Trading' started by ambitions2o, Jan 29, 2009.

  1. I am currently reading up right now on the basics of Forwards Premium and Discounts. My question is this: how do you determine which currency is at a prem/discount to the other currency? It was said that some banks consider the quoting of the prem or discount to the base and others say the quoted.

    Which one is it? If there isn't a universal currency, I would assume they would state it when giving you the points?

    Also please correct me if I am wrong:

    When the points are from high/low then you will subtract them from which ever side you are dealing on and visa versa. So for example:

    AUD/USD .6574 - .6579
    Forward Points 103 - 101

    Client wants to buy 3 million AUD against USD

    What is at a premium or discount? Why?