Voir iotafinance en FrançaisYou are viewing the English version of iotafinance.comIotafinance auf Deutsch sehen
Icon for the finance formula section

Forward foreign exchange rate formula

Description of the Forward foreign exchange rate formula

Formula for the calculation of a forward foreign exchange (FX) rate of a currency pair.

Formula

\[ C_{f} = C_{s} \cdot \frac{\left ( 1 + i_{p} \cdot \frac{n}{N_{p}} \right )}{\left ( 1 + i_{b} \cdot \frac{n}{N_{b}} \right )} \ \]

Symbols

\(C_{s}\ \)       
Spot exchange rate
\(i_{b}\ \)       
Interest rate for a deposit on n days in base currency
\(i_{p}\ \)       
Interest rate for a deposit on n days in price currency
\(n\ \)       
Number of days between spot date and delivery date of the forward
\(N_{b}\ \)       
Number of days per year for the deposit in base currency (360, 365 or 366 depending on day-count convention)
\(N_{c}\ \)       
Number of days per year for the deposit in price currency (360, 365 or 366 depending on day-count convention)