Currency Forward Calculator - FX Forward Rate Pricing

The currency forward calculator prices a theoretical forward exchange rate from covered interest parity using simple interest. Let S be the spot rate, r_d the domestic interest rate, r_f the foreign interest rate, and t = days / 365. Then F = S × (1 + r_d × t) / (1 + r_f × t), with each rate entered as a percent. A spot of 1.10, domestic 5%, foreign 3%, and 365 days produces a forward of about 1.1214. When the domestic rate is higher than the foreign rate, the quoted currency trades at a forward premium in this convention; when it is lower, a discount. The economic idea is that borrowing in one currency, converting at spot, and lending in the other should match a forward sale, otherwise arbitrageurs would do it. Corporates use the forward as a hedge quote check before calling a bank. Students use it to see why interest differentials, not a forecast of the spot, set the no-arbitrage forward. The formula here uses a 365-day year and linear interest, not (1 + r)^t compound interest or a 360-day money-market basis. Those conventions change the fourth decimal on short dates and more on long dates. Match the quoting convention to the labels. In this worksheet, domestic is the rate in the numerator and foreign is the rate in the denominator, consistent with S quoted as domestic per unit of foreign in many textbook treatments. If your pair is quoted the other way, swap the two rates. The calculator does not add a dealer spread, points, or a credit charge, so a tradable outright will differ from this mid-market identity. Caveats: day-count (ACT/360 versus ACT/365), compounding, and which currency is "domestic" are the usual sources of disagreement with a Bloomberg or bank screen. Cross-currency basis can also push traded forwards away from CIP. Recalculate when spot or either yield moves. Used as a parity check, the currency forward calculator makes the interest-rate link to FX forwards easier to see.