Currency Forward Calculator
Enter the spot rate and the domestic and foreign interest rates to find the forward exchange rate.
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Enter the spot rate and interest rates to see the forward rate.
Worked example
With these example inputs:
- Spot exchange rate1.30
- Domestic interest rate4%
- Foreign interest rate2%
Forward exchange rate: 1.33
- Forward points0.03
Frequently asked questions
How is a forward rate calculated?
The forward rate adjusts the spot rate for the interest gap between the two currencies. A 1.30 spot with 4% domestic and 2% foreign rates implies a forward of about 1.3255.
What is a forward contract for?
It locks in an exchange rate today for a future date, removing currency uncertainty. Importers, exporters and investors use forwards to hedge known foreign cash flows.
What is a currency forward in simple terms?
It is an agreement to swap two currencies on a future date at a set rate. Both sides lock that rate in today, even though the swap happens later. This removes the risk that the exchange rate moves against them. Companies often use forwards to make future costs or revenues certain.
How is the forward rate set?
It comes from the spot rate and the gap between two interest rates. The tool scales the spot rate up by the home rate and down by the foreign rate. This keeps the deal fair, so no side can earn a risk-free profit. The math is the covered interest parity rule.
What are forward points?
Forward points are simply the forward rate minus the spot rate. They show how far the locked rate sits above or below today. A positive number means the currency trades at a forward premium. A negative number means it trades at a forward discount.