Forward Premium Calculator

Your details

Choose whether you know both rates and want the premium, or whether you know interest rates and want the theoretical forward rate.
Current exchange rate quoted as units of the quote currency per one unit of the base currency.
Agreed exchange rate for delivery on the future settlement date.
Length of the forward contract in the selected unit.
Convention used to annualize the premium. Money markets use 360, bonds typically use 365, equity desks sometimes use 252.
Forward premium / discountForward premium
0.0022%

Positive = forward premium (base currency at a premium); negative = forward discount.

Annualized premium / discount0.0088%
Forward points (pips)26
Implied interest rate differential0.0088%
Rate difference0.0026
Forward premium0.0022%
Annualized premium0.0088%
Implied rate diff0.0088%

The base currency is at a forward premium of 0.2192% (0.8770% annualized).

  • The forward rate is higher than the spot rate by 0.2192% over 90 days, which annualizes to 0.8770% on a 360-day basis.
  • In pip terms the forward premium is 26.00 forward points (pips), useful for FX dealers who quote in outright pip differentials.
  • Under covered interest rate parity this annualized premium approximates the interest rate differential between the two currencies: the higher-rate currency trades at a forward discount to prevent riskless arbitrage.

Next stepA forward premium on the base currency is consistent with the base-currency country having lower interest rates. Use this premium to check whether a quoted forward contract is fairly priced relative to interest rate parity.

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