Measure currency parity with market rates and periods. View implied forwards, deviations, and annualized comparisons. Export clean results for analysis, review, and reporting needs.
| Case | Spot | Forward | Domestic % | Foreign % | Days | Basis | Implied Forward |
|---|---|---|---|---|---|---|---|
| Covered parity sample | 1.1000 | 1.1120 | 5.00 | 3.00 | 180 | 360 | 1.110837 |
| Short tenor sample | 0.9200 | 0.9245 | 4.25 | 2.10 | 90 | 360 | 0.924838 |
| Longer tenor sample | 149.5000 | 151.0000 | 2.40 | 0.50 | 270 | 360 | 151.617761 |
Covered interest parity links spot, forward, and interest rates.
Simple compounding: Forward = Spot × (1 + domestic rate × time) ÷ (1 + foreign rate × time)
Continuous compounding: Forward = Spot × e(domestic rate − foreign rate) × time
Time equals days to maturity divided by the chosen day count basis.
Parity gap equals actual forward minus implied forward.
Gap percent equals parity gap divided by implied forward.
Interest parity connects exchange rates and interest rates. It helps traders, analysts, and finance students test whether currency pricing stays aligned. This calculator gives quick results for covered and uncovered parity checks. It also estimates missing rates when market data is incomplete.
When covered interest parity holds, two investment paths should give the same domestic outcome. One path keeps money at home. The other converts into foreign currency, earns foreign interest, and locks a forward contract. If the values differ, the market may show a pricing gap.
You can calculate the implied forward exchange rate from spot and interest rates. You can also solve for an implied domestic rate or implied foreign rate. The parity gap mode compares the actual forward rate with the theoretical forward rate. That makes mispricing easier to see.
Uncovered interest parity does not use a locked forward contract. It compares rate differentials with an expected future spot rate. This tool shows the theoretical estimate and the deviation from your expected future rate. That makes expectation analysis more practical.
Short periods can create small but important differences. The chosen day count basis changes the time fraction. The compounding method changes the growth factors. Both settings affect the implied forward result. This matters in treasury work, hedging reviews, and academic exercises.
The export options help you save a clean record of your calculation. Use CSV for analysis in sheets. Use PDF for reports, class notes, or client files. The example table also gives sample values for testing inputs before using live market figures.
Covered interest parity is the relation between spot rate, forward rate, domestic interest rate, and foreign interest rate. It assumes exchange risk is hedged with a forward contract.
Uncovered interest parity compares interest rate differences with an expected future spot rate. It does not lock a forward contract, so expectations drive the comparison.
A gap can appear from market frictions, bid ask spreads, timing differences, credit costs, capital controls, or input errors. Small gaps may not be tradable.
The domestic rate belongs to the currency used in the quoted spot price numerator outcome. Keep your rate and quotation convention consistent through the full calculation.
The notional shows how the pricing difference affects a specific investment size. It helps translate theoretical gaps into a money value for analysis.
Use the convention that matches your market, course, or internal model. Money market examples often use simple rates. Some valuation models use continuous rates.
Yes. It can calculate an implied domestic rate or an implied foreign rate when you already know the spot, forward, tenor, and the other rate.
It is useful for screening and education. Real execution also needs transaction costs, spreads, taxes, funding terms, and settlement details before action.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.