Forward Rate Calculator

Forward rates are based on the Interest Rate Parity (IRP) theory, which states that the difference between forward and spot rates equals the interest rate differential.

A forward premium occurs when the forward rate is higher than the spot rate, indicating the domestic currency is expected to depreciate.

A forward discount occurs when the forward rate is lower than the spot rate, indicating the domestic currency is expected to appreciate.

Use forward rates to lock in exchange rates for future transactions, protecting against currency fluctuations.

The interest rate differential between two currencies is the primary driver of forward rate premiums or discounts.

Forward points represent the difference between the forward rate and spot rate, typically quoted in basis points.

Common forward contract durations are 1, 3, 6, and 12 months. Longer durations typically have larger premiums or discounts.

Forward rates reflect market expectations about future exchange rates based on current interest rate differentials.

Changes in central bank monetary policy affect interest rates and, consequently, forward exchange rates.

Compare forward rates across multiple currency pairs to identify arbitrage opportunities and optimal hedging strategies.