FX Forward Points Calculator
Free FX forward points calculator. Enter the spot rate, the two currencies' interest rates and days to get the forward rate, forward points and premium.
A currency forward locks in an exchange rate for a future date. Its price is not a forecast; it comes from the interest rates of the two currencies, through covered interest rate parity. If dollar interest rates are higher than euro rates, the euro trades at a premium in the forward market, so that holding either currency and hedging earns the same. Forward points are the difference between the forward and spot rates, quoted in pips. This calculator gives the forward rate, the points and the annualised premium or discount.
Calculator#
- Calculator
- Turn on JavaScript to use it, or use the formula below
How it works#
Forward = Spot × (1 + Quote rate × Days / Basis) / (1 + Base rate × Days / Basis)
Forward points = (Forward - Spot) × MultiplierThis uses simple money market interest for short periods. In practice, each currency has its own day count convention and the rates used are interbank or overnight index rates; the calculator uses one basis for both, which is a close approximation. See Covered and Uncovered Interest Parity and FX Forwards and Forward Points.
Premium and discount#
| Interest rates | Base currency forward | Points |
|---|---|---|
| Quote rate higher than base rate | Premium (forward above spot) | Positive |
| Quote rate lower than base rate | Discount (forward below spot) | Negative |
| Equal rates | Forward equals spot | Zero |
A forward discount does not mean the market expects the currency to fall; it reflects the interest rate difference.
Who uses forwards#
| User | Purpose |
|---|---|
| Importers and exporters | Lock in exchange rates for future payments |
| Investors with foreign assets | Hedge currency risk. See Hedging |
| Carry traders | Earn the interest difference, accepting spot risk. See Carry Trades in Forex |
| Banks and funds | Roll positions through FX swaps. See FX Swaps and Currency Swaps |
Forward points and rollover#
Retail forex traders holding positions overnight receive or pay swap charges, which are based on the same forward points, adjusted for broker markups. A position long the higher yielding currency usually earns a small amount each night; short positions pay. See Rollover and Swap in Forex.
Beyond parity#
Covered interest parity held very closely before 2008. Since then, persistent deviations known as the cross currency basis have appeared, reflecting demand for dollar funding and limits on bank balance sheets. For most purposes the formula is accurate enough, but large institutions price the basis explicitly. See Cross-Currency Basis.
Frequently asked questions#
How are FX forward rates calculated?#
By adjusting the spot rate for the interest rate difference between the two currencies over the period, using covered interest rate parity.
What are forward points?#
The difference between the forward rate and the spot rate, expressed in pips, added to spot to get the forward rate.
Does a forward premium predict the currency will rise?#
No. It reflects the interest rate difference, not a forecast of future spot rates.
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