What this calculator does
Covered Interest Rate Parity works out no-arbitrage forward exchange rate implied by the interest rate gap between two currencies. Enter your own figures above and the answer updates as you type: nothing is fixed in the code, so the result reflects exactly the numbers you supply.
The formula this calculator evaluates is printed under the tool and explained below, so you can check the working by hand or reuse it in a spreadsheet.
The formula
The inputs explained
| Field | What to enter |
|---|---|
| Spot exchange rate | A number. Starts at 1.1. |
| Price currency interest rate (annual, %) (%) | A number, measured in %. Starts at 5. |
| Base currency interest rate (annual, %) (%) | A number, measured in %. Starts at 2. |
| Days until settlement | A number. Starts at 180. |
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the answer changes with spot exchange rate
Every other input is held at the calculator’s starting values while spot exchange rate varies. Select any row to load that scenario into the calculator.