Whenever a nation's currency is expected to depreciate because of various market conditions, the following situation exists regarding its forward rate for another currency:

a. there is a forward discount from the spot rate by the rate of depreciation.
b. there is a forward premium from the spot rate by the rate of depreciation.
c. there is no difference between the spot and forward rates.
d. there is no predictable relationship between the spot and forward rates

Ans: b. there is a forward premium from the spot rate by the rate of depreciation.