# Forward rates calculator

The Invezz forward rates calculator allows you to anticipate the fluctuations in the value of currencies over a set period of time. It is especially useful when making forex trades using futures contracts.

## How to use our forward rates calculator

To use our forward rates calculator for a specific currency pair (e.g. USD/GBP), follow these simple steps:

- Enter the spot exchange rate (i.e. the current market exchange rate)
- Enter the interest rate of the base currency
- Enter the interest rate of the price currency
- Give the spot date
- Give the forward date
- Enter the basis on which the interest rate is applied (either 360 or 365)

## How the forward rates calculator works

The forward rates calculator takes all the information about the current exchange rate of a currency pair, and then uses the current rate of inflation of each currency to calculate the likely exchange rate at a given point in the future.

For example, Let’s say you wanted to calculate the forward rate of USD/GBP in three months’ time, given a current spot rate of 1.38 and inflation rates of 0.7% and 0.5% respectively. You would enter this information into the calculator, which would then figure out how much the currencies would change in value against each other over the time period, and give you the forward rate figure of 1.37955.

## Why should I use it?

Our forward rates calculator can help you mitigate risk when trading forex or agreeing to pay for a transaction in a foreign currency at a later date – for instance when buying a property abroad.

With our quick and easy forward rates calculator you can work out how much a foreign currency transaction is likely to cost you given current interest rates, so you don’t end up paying over the odds.

## What is a forward rate?

A forward rate, also known as a forward exchange rate, is the level at which the spot rate of a currency pair is likely to be on a given date in the future. It is figured out from the current spot rate and the respective interest rates of the two currencies, and is used by banks and other financial institutions when making forward contracts for currency trades.