Forward Points
Forward points are adjustments used to calculate the forward exchange rate in the foreign exchange market. The forward rate is derived from the spot rate plus or minus the forward points. Forward points reflect the interest rate differential between two currencies. If one country's interest rate is higher than another's, the forward points for that currency are usually negative, and vice versa. Forward points help traders and investors hedge against exchange rate risk, engage in hedging, or speculate.
Forward points refer to an adjustment value used in the foreign exchange market to calculate the forward exchange rate. The forward exchange rate is derived from the spot rate plus or minus the forward points. Forward points reflect the interest rate differential between two currencies. If one country's interest rate is higher than another's, the forward points for that currency are usually negative, and vice versa. Forward points can help traders and investors hedge exchange rate risk, engage in hedging, or speculate.
