Forward Exchange Rate Calculator (Covered Interest Parity)
The forward rate of a currency pair from the spot rate, the two interest rates and the number of days, with the forward points and the annualised premium or discount.
Results
The dashed line marks the value you entered.
What this tool does
A forward exchange rate is not a forecast: it is the rate that leaves no risk-free profit between lending in one currency and lending in the other, which is covered interest parity. The currency with the higher interest rate trades at a forward discount, and the one with the lower rate at a premium, by almost exactly the interest-rate gap. The pair is quoted as units of the quote currency per 1 of the base currency, so in EUR/USD the euro is the base. Real quotes also carry bank spreads and the rates are money-market rates for that term.
Formula
F = S × (1 + r_quote × d ÷ B) ÷ (1 + r_base × d ÷ B) (covered interest rate parity, B = 360 or 365)
Variables
| Symbol | Meaning | Unit |
|---|---|---|
s | Spot rate (units of quote currency per 1 of base currency) | — |
rq | Interest rate of the quote currency, per year | % |
rb | Interest rate of the base currency, per year | % |
d | Days until delivery | d |
bs | Day-count basis of the rates | — |
F | Forward rate | — |
FP | Forward points (forward − spot) | — |
PR | Premium (+) or discount (−) of the base currency, per year | % |
Worked example
- Spot rate (units of quote currency per 1 of base currency)1.1
- Interest rate of the quote currency, per year4 %
- Interest rate of the base currency, per year2.5 %
- Days until delivery90 d
- Day-count basis of the rates360
- Forward rate1.10410
- Forward points (forward − spot)0.00410
- Premium (+) or discount (−) of the base currency, per year1.491 %
Limitations
- This is an informational calculator, not personalised financial advice. Rates, fees, taxes and contract conditions vary between institutions and countries.
- The result is an estimate based only on the values you type. Real situations often include factors this calculator does not know about.