Premium and discount: the difference between forward exchange rate and spot exchange rate is expressed by premium, discount and flat price. Premium means that the forward exchange rate is higher than the spot exchange rate, while the discount is the opposite. In general, the currency forward exchange rate with higher interest rate is mostly discount, and the currency forward exchange rate with lower interest rate is mostly premium. ?

If the forward futures price is lower than the recent futures price and the spot price is higher than the futures price, the basis is positive, which is called "futures discount" or "spot premium". The part where the forward futures price is lower than the recent futures price is called "futures discount".

Extended data

Basis consists of two components, namely "time" and "space" between spot and futures markets. The former reflects the time factor between the two markets, that is, the holding cost of two different delivery months, which also includes storage fee, interest, insurance premium and loss fee.

Among them, the change of interest rate has a great influence on the holding cost; The latter reflects the spatial factors between the spot market and the futures market. Basis includes transportation cost and holding cost between two markets. This is also the basic reason why two different locations have different basis differences at the same time.

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