Forward Exchange Rate Calculator

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Finance

Calculate the forward exchange rate given spot rate, interest rates, and time period. Forward Rate = Spot Rate × [(1 + domestic interest rate) / (1 + foreign interest rate)]^n. Used in forex hedging and international finance.

Formula

Forward Rate = Spot × [(1 + r_domestic) / (1 + r_foreign)]^(t/1 year)
  • Forward Rate Calculator gives you a fast estimate using your inputs and updates instantly when you change any value.
  • Formula: Forward Rate = Spot × [(1 + r_domestic) / (1 + r_foreign)]^(t/1 year)
  • Input definitions: • Spot Exchange Rate: current exchange rate • Domestic/Foreign Interest Rates: annual rates as percentages • Days to Forward: time period for the forward contract
  • Manual method: write down each input, apply the formula step by step, then compare your manual result with the calculator output.
  • Enter monetary values in your local currency. Enter interest rates as plain numbers (e.g. enter 5 for 5 %).
  • Assumes constant rates and interest rate parity holds (no arbitrage).
  • Practical tip: compare forward rate to spot to see the premium/discount.

Example Calculation

Inputs
  • Spot Exchange Rate: 100 ratio
  • Domestic Interest Rate (%): 4 %
  • Foreign Interest Rate (%): 2 %
  • Days to Forward: 180 days

Suppose you enter: Spot Rate = 100, Domestic Rate = 4%, Foreign Rate = 2%, Days = 180. The calculator applies interest rate parity to derive the forward rate.

Frequently asked questions

What is the Forward Rate?
The Forward Rate Calculator is a financial calculator that helps you calculate currency forward rates using interest rate parity. Forward rate reflects interest rate differentials.
When should I use this calculator?
Use this calculator for forex hedging, international trade, or understanding how interest rates affect currency valuations.
What units should I enter?
Enter exchange rate as ratio (e.g. 100 units of foreign per 1 domestic). Enter interest rates as plain numbers (e.g. enter 5 for 5%).
How accurate are the results?
Accurate assuming interest rate parity holds and rates remain constant over the period.
Can I use this for currency hedging?
Yes. Forward rate is the hedge rate—lock in this rate to eliminate exchange rate risk.