Forward Premium
Forward Premium is a fast, free finance calculator. Enter Spot Exchange Rate, Forward Exchange Rate and Days in Forward Contract to get an instant, accurate result — complete with the formula, a step-by-step worked example, and answers to common questions, all on one page and private to your browser.
Formula
Premium% = [(Forward - Spot) / Spot] × 100; Annualized = Premium% × (365/Days)
- Positive premium = currency appreciated
- Negative premium = currency depreciated
- Forward points in basis points
EUR Forward Premium
Inputs
- Spot Exchange Rate: 1.5 ratio
- Forward Exchange Rate: 1.52 ratio
- Days in Forward Contract: 180 days
Spot 1.50, 6-month forward 1.52 = 1.33% premium = 2.67% annualized
Frequently asked questions
What causes forward premium?
Interest rate differentials between currencies (higher rates lead to currency depreciation, reflected in forward premium).