FX Hedge Calculator (2026)

1. Choose receivable or payable, then enter the foreign currency amount and the spot rate as home currency per one unit of foreign currency.
2. Enter the home and foreign interest rates and the days to settlement. The tool builds the parity forward rate. A bank quote typed in the optional field replaces it.
3. Set the hedge ratio and add a scenario spot rate to compare the hedged and unhedged outcomes.

What each result tells you:

An FX hedge is a transaction that fixes or limits the home-currency value of a future foreign-currency cash flow. The most common tool is the forward contract, an agreement made today to exchange two currencies on a set future date at a set rate.

An exporter that will receive foreign currency sells it forward. An importer that must pay foreign currency buys it forward. In both cases the home-currency amount is known today, and later moves in the spot rate no longer change it.

Forwards are a large market. The Bank for International Settlements (BIS) reports that trading in outright forwards, which market participants use to lock in future exchange rates, was 1.8 trillion US dollars a day in April 2025. That was 19 percent of global FX turnover of 9.6 trillion a day.

A hedge is not a way to profit from currency moves. It trades an uncertain outcome for a fixed one. This page covers forward hedges only. Options and natural hedges work differently and are not modeled here.

The calculator prices the forward with covered interest parity (CIP), then applies that rate to the hedged share of your amount.

1. Time fraction = days to settlement / 360 or 365.
2. Parity forward = spot x (1 + home rate x time) / (1 + foreign rate x time). Both rates use simple interest, as money markets do for short periods.
3. Locked amount = foreign amount x hedge ratio x forward rate.
4. Unhedged outcome = foreign amount x scenario spot rate.
5. Hedged outcome = locked amount + the unhedged share x scenario spot rate.
6. Hedge result = hedged outcome - unhedged outcome for a receivable, and the reverse for a payable.

CIP is a no-arbitrage rule. The BIS describes it this way: the interest rate differential between two currencies in the cash money markets should equal the differential between the forward and spot exchange rates. Otherwise a trader could borrow one currency, lend the other, cover the exchange risk with a forward and keep a riskless profit.

All rates below are round illustrations, not market data. A company will receive 1,000,000 units of foreign currency in 90 days. Spot is 1.1000 home per foreign. The home rate is 4.5 percent and the foreign rate is 2.5 percent, on a 360-day year.

Meaning: the forward fixes 1,105,465.84 whatever the spot rate does. That is 5,465.84 more than converting at today's spot, because the foreign currency has the lower interest rate. Should the spot rate rise to 1.1500 instead, the unhedged amount would be 1,150,000.00 and the hedge would look 44,534.16 worse. The hedge removed both outcomes.

Interest Rate Gap

The gap between the two interest rates sets the forward points. With a 4.5 percent home rate and a 2.5 percent foreign rate, the 90-day forward is 54.66 points above spot. Swap the two rates and it is 54.39 points below spot, at 1.09456.

Days to Settlement

A longer period widens the gap between forward and spot. The same rates give 54.66 points at 90 days and 214.63 points at 360 days, a forward of 1.12146.

Day Count

A 365-day year gives a slightly different result from a 360-day year. The 90-day example moves from 1.10547 to 1.10539. Currencies follow different conventions, so check the one your bank uses.

Hedge Ratio

The ratio sets how much of the exposure is fixed. At 50 percent the example locks 552,732.92 and leaves 500,000 of foreign currency open. At a 1.0500 spot the total is then 1,077,732.92, which is 27,732.92 better than no hedge.

The Bank Quote

A dealing quote includes a bid-offer spread and can include a credit charge. Enter it in the quoted forward field to see how far it sits from parity.

A hedged position gives the same home-currency amount at every future spot rate. An unhedged position rises and falls with the rate. The table uses the 1,000,000 receivable from the example, fully hedged at 1.10547.

The break-even future spot rate is the forward rate itself. For a payable the columns reverse: a hedge helps when the foreign currency gets more expensive. Buying 500,000 forward for 180 days at 1.11086 fixes a cost of 555,432.10. At a 1.1600 spot the unhedged cost is 580,000.00, so the hedge saves 24,567.90.

What Does a Forward Hedge Cost?

A forward has no upfront premium. Its cost shows up in two places: the forward points, which reflect the interest rate gap, and the dealer spread built into the quote. In the payable example the locked cost is 5,432.10 above the spot value of 550,000.00. That gap is interest parity at work, not a fee. A business protecting a thin profit margin compares that known cost with the size of an adverse move.

Pricing a Foreign Invoice

An exporter quoting in a foreign currency checks the forward rate before setting the price. The locked amount shows the home-currency revenue the quote will bring.

Checking a Bank Quote

Enter the quoted forward next to the two interest rates. A large distance from parity is a reason to ask the bank how the rate was built or to request a second quote.

Choosing a Hedge Ratio

Run 100, 50 and 0 percent against a low and a high scenario rate. The spread of outcomes shows how much uncertainty each ratio leaves.

Budgeting a Future Payment

An importer or a person with a large future payment abroad sees the fixed cost today. Discounting that cost back to today is a job for the present value calculator.

1. Inverting the Quote

The tool needs home currency per one unit of foreign currency. Entering the rate the other way round reverses the forward points. Take 1 divided by the rate to flip a quote.

2. Swapping the Two Interest Rates

The home rate belongs to the currency you count in. Swapping the rates turns a forward premium into a discount.

3. Calling the Forward Points a Fee

Points come from the interest rate gap. They can work for you or against you, and they are not a bank charge.

4. Judging a Hedge by Hindsight

A hedge that looks worse than the unhedged outcome did its job: it removed the risk. The result against one scenario rate is not a score.

5. Hedging an Uncertain Amount in Full

A forward is a firm commitment. Hedging 100 percent of a sale that might not happen creates a new exposure.

6. Reading the Forward as a Forecast

The forward rate reflects interest rates today. It is not a prediction of where the spot rate will be.

The parity forward is exact for the rates you enter, but real quotes deviate from it. BIS research shows that covered interest parity has not held exactly since the global financial crisis. The gap is called the cross-currency basis, and it means a market forward can differ from the textbook value.

A forward rate equals the spot rate multiplied by (1 + home interest rate x time) and divided by (1 + foreign interest rate x time). With a 1.1000 spot, 4.5 and 2.5 percent rates and 90 days, the forward is 1.10547.

Forward points are the forward rate minus the spot rate, shown in units of 0.0001 for most pairs. A forward of 1.10547 against a spot of 1.10000 is 54.66 points.

The forward is higher when the home interest rate is above the foreign interest rate. The forward premium offsets the extra interest, so that holding either currency gives the same covered return.

A forward normally has no upfront premium, unlike an option. The cost sits in the dealer spread and in the forward points, and a bank may ask for a credit line or margin.

No single ratio suits every business. A firm order with a fixed amount is often hedged more fully than a forecast sale. Test several ratios in the tool and take the decision with a treasury or finance professional.

The forward still settles at the agreed rate, so you do not gain from the move. In the example, a rise to 1.1500 leaves the hedged receivable 44,534.16 below the unhedged amount.

No. The forward rate comes from today's spot rate and the two interest rates. It is a price that prevents arbitrage, not a forecast.

A bank quote includes a bid-offer spread and can include a credit charge. BIS research also shows that market forwards deviate from covered interest parity by an amount called the cross-currency basis.

Use money-market or deposit rates for the same period as the hedge, one for each currency. A 90-day hedge uses 3-month rates, entered as yearly percentages.

A forward is a poor fit when the amount or date of the cash flow is uncertain, because the contract must be settled either way. It also does not suit someone who wants to keep the gain from a favorable move.

No. The calculation runs in your browser and nothing is sent to our servers. Anything you Save stays in this browser only.

• Covered interest parity lost: understanding the cross-currency basis (Bank for International Settlements, BIS Quarterly Review, September 2016).
• Foreign Exchange Market: covered interest rate parity (Brandeis University, Econ 161a International Macroeconomics and Finance course notes).
• OTC foreign exchange turnover in April 2025 (Bank for International Settlements, Triennial Central Bank Survey).
• Covered Interest Rate Parity (CIRP) (Corporate Finance Institute).