Forward Premium

ratio
ratio
days
Finance

Forward Premium is a fast, free finance calculator. Enter Spot Exchange Rate, Forward Exchange Rate and Days in Forward Contract to get an instant, accurate result — complete with the formula, a step-by-step worked example, and answers to common questions, all on one page and private to your browser.

Formula

Premium% = [(Forward - Spot) / Spot] × 100; Annualized = Premium% × (365/Days)
  • Positive premium = currency appreciated
  • Negative premium = currency depreciated
  • Forward points in basis points

EUR Forward Premium

Inputs
  • Spot Exchange Rate: 1.5 ratio
  • Forward Exchange Rate: 1.52 ratio
  • Days in Forward Contract: 180 days

Spot 1.50, 6-month forward 1.52 = 1.33% premium = 2.67% annualized

Frequently asked questions

What causes forward premium?
Interest rate differentials between currencies (higher rates lead to currency depreciation, reflected in forward premium).