Spot, forward, and the carry between two currencies.
Convert any amount, then see what covered interest parity says the forward rate should be — and the carry you'd earn or pay holding one currency over another.
Built and reviewed by Stephen Omukoko Okoth
Mathematical Economist · ex-Morgan Stanley FI · Equilar
Inputs
Currencies & spot
Inputs
Interest rates (for forward)
Verdict
1,000,000 KES = 7,800 USD
Spot 1 KES = 0.007800 USD • Forward (1y) 0.007088.
Forward rate is computed by covered interest parity. If KES pays 15% and USD pays 4.5%, the forward must compensate or arbitrage exists. The discount of 9.13% is the price of locking in today.
Conversion
Spot exchange
KES amount
1,000,000
USD value
7,800
Forward & carry
The market's view of the future
1y forward rate
0.007088
1 KES → USD
Forward premium
-9.13%
Carry
10.50%
KES rate − USD rate
Carry interpretation
Earn carry holding KES
Common questions
What is covered interest parity?
The forward exchange rate is determined by the spot rate and the interest rate differential between two currencies: F = S × (1 + r_quote) ÷ (1 + r_base). If a currency has a higher rate, its forward is at a discount — that's the cost of carry.
What is FX carry?
Borrowing in a low-rate currency and investing in a high-rate one. The 'carry' is the rate differential. It looks like free money in calm markets but is exposed to currency moves — when the high-rate currency depreciates, the carry trade unwinds violently.
Why doesn't the forward rate match my expectation?
Forwards reflect interest-rate differentials, not forecasts. A currency at a forward discount might still appreciate; one at a premium might still depreciate. Forwards price the cost of hedging, not the future spot.
What's a 'spot' rate vs 'forward' rate?
Spot is for delivery in two business days at today's rate. Forward is contracted today for delivery on a future date, with the rate locked in. Banks quote forwards in 'pips' relative to spot — positive pips = forward premium, negative = discount.