This dissertation aims to verify and explain the forward exchange rate unbiasedness hypothesis (UH). Since in most cases the unbiasedness hypothesis fails to hold. This hypothesis argues that the forward rate fully reflects the information regarding exchange rate expectations, so the forward spread predicts the direction change in future spot rates. We will be examining and analyzing developed economies – Europe & US Dollar (EURO & USD) and the emerging economies India & Morocco (INR and MAD) and Swedish krona SEK being the base currency for the forward exchange rate unbiasedness hypothesis for the long run and short run.

In our research, we specifically focalize on the detainees of the unbiasedness hypothesis and why it fails to hold, this will be done using econometrics models like Unit Root (ADF), Cointegration, and Error Correction Model (ECM), to test the stationary or nonstationary between the spot rate and forward exchange rate. Unit root and cointegration is a statistical technique that will help us to test the correlation between the spot rate and forward exchange rate, and further according to previous research, ECM seems to be the best model to test UH because it takes short-run and long-run periods.

It's our pleasure to thank all the University West Economic dept, for their kind instructions.