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Reviewed by CA Nikhil Gupta · Last reviewed 11 October 2026
Enter the spot rate, the two interest rates and the number of days to see the theoretical forward rate and the premium or discount.
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Calculate a theoretical covered-interest-parity forward exchange rate with day-count basis, INR/foreign rate conventions and tenor sensitivities.
For an INR 84 spot price of one foreign unit, 6% domestic annual rate, 4% foreign annual rate and 180/365 years, the simple-interest parity forward is about INR 84.81 per foreign unit.
Under simple-interest covered parity, forward rate is spot multiplied by (1 + INR interest × time) divided by (1 + foreign interest × time). Forward points are the difference between the theoretical forward and spot. The calculation assumes a consistent base/quote currency convention.
Actual quoted forwards depend on execution timing, spreads, bank funding, liquidity, cross-currency basis and holidays; this calculator does not retrieve current bank rates or certify hedge accounting under Ind AS 109.
Check that the spot quote is INR paid for one unit of foreign currency before using the formula. If the domestic annualised money-market rate exceeds the foreign rate, the simplified forward convention generally places the foreign currency at an INR forward premium. A negative premium is not necessarily a bearish currency forecast; forward rates are shaped by financing relationships. Actual dealer quotes require settlement dates, market conventions, holiday calendars, liquidity basis and counterparty spread. Hedge accounting is a separate assessment of risk management designation, documentation and effectiveness.
Spot quote timestamp, loan/deposit curve sources, fixing and settlement dates, bank forward quotation, trade exposure evidence, hedge policy and contract confirmation.
No. It reflects an arbitrage relationship under specified rates and assumptions. Liquidity, funding basis, bid/ask, settlement holidays and credit costs can create differences. Use rates for the correct domestic/foreign legs and consistently quote domestic currency per foreign unit.
A no-arbitrage relationship: the forward rate reflects the difference between the two currencies’ interest rates over the same tenor.
Banks add spreads, use money-market rather than policy rates, and the market can depart from parity. Treat this as a benchmark.
Use the convention for the currency pair. INR and USD money-market rates are commonly quoted on a 365 or 360 day basis; check your dealer.
Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.
Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.
Background, worked examples and the rules behind these numbers.