FX Forward Premium & Discount Calculator

A forward premium is the condition where the forward rate (F) is higher than the spot rate (S) for the same currency pair. Its size is computed with (F − S) / S × 100%. Example: EUR/USD spot 1.0800 and 90-day forward 1.0910 give a premium of 1.0185%. A premium generally reflects that the base currency’s interest rate is higher than the quote currency’s.

A forward discount is the opposite of a premium: the forward rate is lower than the spot rate (F < S), making (F − S) / S negative. Example: spot 150.00 and 30-day forward 149.50 give a discount of −0.3333%, or −4.00% annualized on a 360 basis. In market terms, a forward discount is also called deport.

A raw premium only applies to its contract tenor. To compare different tenors, the premium is annualized: annual premium = ((F − S) / S) × (basis / days) × 100%. A 360 basis is the most common money-market convention; some sources use 365. Example: a 1.0185% premium for 90 days becomes 4.07% per year on a 360 basis, since 1.0185% × (360 / 90) = 4.07%. This calculator offers both basis choices.

Forward points (also called forward pips or swap points) are the forward-minus-spot difference expressed in pips, not percent: forward points = (F − S) × 10,000. Example: F = 1.0910 and S = 1.0800 give 110 pips. For yen pairs like USD/JPY the convention is × 100: the 149.50 − 150.00 difference equals −50 points. Forward points reflect the two currencies’ interest-rate differential per covered interest parity.

The link is covered interest parity: F = S × (1 + rd × t) / (1 + rf × t), where rd is the domestic rate, rf the foreign rate, and t the tenor in years. In other words, the lower-interest currency tends to trade at a forward premium against the higher-interest currency. Example: spot 1.0800, rd 4.5%, rf 2.0%, and a 90-day tenor (360 basis) give a theoretical forward rate of 1.0867. This relationship is a no-arbitrage condition under ideal conditions, not a rate forecast.

Both use the word forward but live in different domains. Forward premium is a foreign-exchange concept: the comparison between a currency pair’s spot and forward rates. Forward rate is an interest-rate concept: the implied forward interest rate derived from the spot rate curve (e.g. for bonds or deposits), with no currency rates involved. This calculator only covers FX forward premium and discount.

Not directly. The forward rate is a contract price reflecting the interest-rate differential, not a market consensus about the future spot rate. Empirically, uncovered interest rate parity often fails — the phenomenon known as the forward premium puzzle. Use forward premium figures as a measure of hedging cost, not as a forecast.

Given EUR/USD spot (S) = 1.0800, 90-day forward (F) = 1.0910, and a 360 basis. Absolute difference = F − S = 0.0110. Premium = (1.0910 − 1.0800) / 1.0800 × 100% = 1.0185%. Annual premium = 1.0185% × (360 / 90) = 4.07%. Forward points = 0.0110 × 10,000 = 110 pips. Since F exceeds S, the euro is at a forward premium to the US dollar for the 90-day tenor.

The parity formula assumes no transaction costs, no capital controls, and borrowing rate = lending rate — ideal conditions that do not fully hold in real markets. In practice, bid-ask spreads and transaction costs create a no-arbitrage band, not a single point. So treat the theoretical forward rate as an educational reference point. The results on this page are educational estimates, not investment advice.