Work out forward premium instantly with clear inputs, formula shown and shareable results.
The forward premium is the percentage gap between forward and spot, annualised to make tenors comparable. Under covered parity it equals the interest rate differential, so a premium far from that gap signals a market dislocation.
Forward premium
Premium = (F - S)/S; annualised = premium × 365/days
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
A wide interest differential, or in stressed markets a shortage of one currency in the funding market.
In cash-flow terms yes. It is the certain cost of removing exchange rate uncertainty.