A currency exchange rate for an exchange to be done in the future, which can be 30 days, 60 days, 90 days, 180 days or one year. When a firm buys or longs a currency forward, it is obliged to exchange a specific amount of the base currency for a specific amount of price currency on a future date specified in the contract.
Forward exchange rate = Spot exchange rate x (1+rp)/(1+rb)
rp: risk-free rate of price currency
rb: risk-free rate of base currency
See also: Spot exchange rate« Back to Index