Interest Rate Parity  (IRP) Calculator Notes
Spot Rate, S Spot exchange rate
Domestic Annual Interest Rate (%)   Use annual interest rate in home country, such as 5(%); id = annual rate * (Days of Forward Contract / 360)
Foreign Annual  Interest Rate (%)  Use annua interest rate in foreign country, such as 5(%);if = annual rate * (Days of Forward Contract / 360)
Days till Maturity of the Forward Contract Could be 90 days, 180 days, 270 days, or 360 days, etc. Use a 360-day year to calculate the partial interest rate. For example, 90 days is 1/4 of a year
Forward Rate, F -- Forward exchange rate based on Interest Rate Parity
Forward Premium / Discount -- Forward premium or discount


The formula to determine the forward foreign exchange rate is the following:

 F = S * ((1 + id) / (1 + if)

A simpler version: F = S*(iif


Forward Premium = F/S -1 = (F-S)/S


Copy right @