FX Forward Rate & Currency Hedging Calculator

The forward rate isn't a forecast, it's arithmetic. See exactly how the interest rate gap between two currencies prices the contract that locks in your exchange rate.

Reading This Tool

How To Use This Calculator

Enter today's spot rate and each currency's interest rate, and the forward rate falls out of covered interest rate parity.

The currency with the higher interest rate always trades at a forward discount, the currency with the lower rate trades at a forward premium, that's what stops risk-free arbitrage between money markets and FX markets. The chart compares locking in the forward against leaving the exposure open to a market move.

Your Inputs

Spot Rate (Domestic Per 1 Foreign Unit) 1.3500

Domestic Interest Rate 4.50%

Foreign Interest Rate 5.00%

Contract Term

Notional Amount (Foreign Currency) $500,000

Your Position

Receiving Foreign Currency Paying Foreign Currency

Possible Adverse Spot Move 5%

Uses the standard covered interest rate parity formula with simple interest over the contract term, the textbook approximation dealers use for short-dated forwards.

Forward Pricing

Forward Rate

0.0000

Forward Points

0.0000

Annualized Forward Premium / (Discount)

0.00%

Domestic Value, Hedged (Locked In)

Domestic Value, Unhedged At Today's Spot

Hedged vs. Unhedged Outcomes, In Domestic Currency

Ignores bid-ask spreads, credit and margin requirements on the forward contract, and cross-currency basis effects that can move real dealer quotes away from textbook covered interest parity, especially in stressed markets.

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