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Forward Rate Calculator

Enter the spot rate, both interest rates and the term to find the forward rate.

How to use

  1. Enter your values in the fields above.
  2. Press Calculate to see your result instantly.
  3. Use the Share button to copy a link to your result.

About this calculator

Covered interest rate parity (CIRP) links the forward exchange rate to the spot rate and the interest-rate gap between two currencies: F = S × (1 + i_domestic × t) / (1 + i_foreign × t), where S is the spot rate, i_domestic and i_foreign are the two interest rates, and t is the term of the contract. The currency with the higher interest rate trades at a forward discount, and the one with the lower rate trades at a forward premium — the parity condition is what keeps arbitrage between spot, forward and money markets from being profitable.

Bank forward desks and FX dealers use this formula to quote forward rates to clients, corporate treasurers use it to hedge the exchange-rate risk on future foreign-currency receivables or payables, and arbitrage and carry traders use it to check whether a quoted forward rate leaves any risk-free profit on the table.

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