The AED to INR forward exchange rate (also referred to as forward rate or forward price or AED to INR forecast) is the exchange rate at which a bank agrees to exchange Emirati Dirham to Indian Rupee for another currency at a future date when it enters into a forward contract with an investor. Multinational corporations, banks, and other financial institutions enter into forward contracts to take advantage of the AED to INR forward rate for hedging purposes in case AED to INR going up or Emirati Dirham to Indian Rupee going down. The Emirati Dirham to Indian Rupee forward exchange rate is determined by a parity relationship among the AED to INR spot exchange rate and differences in interest rates between two countries, which reflects an economic equilibrium in the foreign exchange market under which arbitrage opportunities are eliminated. When in equilibrium, and when interest rates vary across two countries, the parity condition implies that the forward rate includes a premium or discount reflecting the interest rate differential. Forward Emirati Dirham to Indian Rupee exchange rates forecast he important theoretical implications for forecasting future spot exchange rates. Financial economists he put forth a hypothesis that the forward rate accurately predicts the future spot rate, for which empirical evidence is mixed.
AED to INR forecasting is the process of making Emirati Dirham to Indian Rupee predictions of the future based on past and present data and most commonly by analysis of trends. A commonplace example might be estimation of some variable of interest at some specified future date. AED to INR prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgmental methods. Usage can differ between areas of application: for example, in hydrology the terms "AED to INR forecast" and "Emirati Dirham to Indian Rupee forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "AED to INR prediction" is used for more general estimates, such as the number of times floods will occur over a long period.