Estimate an implied forward FX rate from spot, quote-currency rate, base-currency rate, and tenor, then measure the resulting forward premium or discount.
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FX Carry
A forward premium calculator estimates the carry-consistent difference between a spot FX rate and an implied forward rate over a chosen tenor. It is useful because forward premiums and discounts can look like directional market signals when they are often just the mechanical result of the entered interest-rate differential and quote convention.
Forward premium compares the implied forward rate with spot. If the forward rate is above spot, the base currency is at a forward premium in the chosen quote convention. If the forward rate is below spot, it is at a forward discount.
That distinction matters because traders, hedgers, and treasury teams often need to separate the carry-driven forward adjustment from a true view on where the spot market might trade later. The two are not the same thing.
This calculator uses a simple covered-interest-parity relationship with the spot quote entered as quote currency per one base currency. The quote-currency rate sits in the numerator and the base-currency rate sits in the denominator.
After solving the forward rate, the tool converts the difference from spot into forward points, a term premium or discount, and an annualized premium or discount so the tenor effect is easier to compare across maturities.
Forward rate = Spot rate x (1 + Quote-currency rate x term) / (1 + Base-currency rate x term)
The simple-rate covered-interest-parity relationship used by this calculator.
Forward premium or discount = (Forward rate / Spot rate - 1) x 100
The percentage difference between forward and spot before annualization.
Suppose the spot quote is 1.1000 quote currency per one base currency, the quote-currency money-market rate is 5.00%, the base-currency rate is 3.00%, and the tenor is six months. The implied forward rate is about 1.1108, which puts the base currency at roughly a 0.99% forward premium over the six-month period.
Annualized, that premium is roughly 1.97%. The result is close to, but not exactly equal to, the simple 2-point interest differential because the parity relationship compounds both carry factors over the term.
A forward premium or discount does not tell you where spot must trade on the future settlement date. It tells you the carry-consistent forward price implied by the entered rate relationship and quote convention.
Real market forwards can also deviate from a textbook parity estimate because of cross-currency basis, collateral terms, bid-ask spreads, capital constraints, and settlement conventions. That is why a calculator like this is best used as a transparent benchmark rather than as a final dealing quote.
Further reading
Frequently asked questions
It means the implied forward rate is above spot in the quote convention you entered. That reflects the carry relationship between the two currencies over the selected tenor, not necessarily a directional spot forecast.
Because the forward relationship compounds the quote-currency and base-currency carry factors over the term. The premium is close to the rate spread for short maturities, but not always identical.
No. It gives a transparent parity estimate. Real dealing quotes can differ because of basis, collateral, settlement conventions, credit charges, and bid-ask spreads.
No. Forward premium is a pricing relationship between spot, tenor, and carry. It should not be read as a guaranteed prediction of future spot moves.
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