# FX Forward Curves

BlueGamma provides FX forward rates derived from market data, allowing you to project future exchange rates for financial modelling and hedging.

***

## What Is an FX Forward Rate?

An FX forward rate is the exchange rate agreed today for a currency exchange that will occur at a future date. It differs from the spot rate due to the **interest rate differential** between the two currencies.

**Example:** If the EUR/USD spot rate is 1.05, the 1-year forward rate might be 1.07 — reflecting the fact that USD interest rates are higher than EUR rates.

***

## Covered Interest Rate Parity

FX forward rates are determined by **covered interest rate parity** — a no-arbitrage relationship between spot rates, forward rates, and interest rates in each currency.

$$
F = S \times \frac{(1 + r\_d)^t}{(1 + r\_f)^t}
$$

Where:

* **F** = Forward rate
* **S** = Spot rate
* **r\_d** = Interest rate in domestic (quote) currency
* **r\_f** = Interest rate in foreign (base) currency
* **t** = Time to maturity in years

### Why This Works

If the forward rate deviated from this formula, traders could:

1. Borrow in one currency
2. Convert to the other at spot
3. Invest at that currency's rate
4. Lock in the forward rate to convert back

This arbitrage would be risk-free profit — so markets quickly eliminate any deviation.

***

## Forward Points

The difference between the forward rate and spot rate is expressed as **forward points**:

$$
\text{Forward Points} = (F - S) \times 10{,}000
$$

Forward points are quoted in pips (0.0001 for most pairs).

**Example (December 2024):**

|                 | EUR/USD  |
| --------------- | -------- |
| Spot Rate       | 1.1776   |
| 6M Forward Rate | 1.1873   |
| Forward Points  | +97 pips |

Positive forward points mean the base currency (EUR) is trading at a **forward premium** — EUR rates are lower than USD rates, so EUR is worth more in the future.

***

## Example: EUR/USD Forward Curve

Here's the current EUR/USD forward curve (December 2024):

| Tenor | Date     | Forward Rate | Forward Points | Premium |
| ----- | -------- | ------------ | -------------- | ------- |
| Spot  | —        | 1.1776       | —              | —       |
| 1M    | Jan 2026 | 1.1793       | +17            | +0.14%  |
| 3M    | Mar 2026 | 1.1825       | +49            | +0.42%  |
| 6M    | Jun 2026 | 1.1873       | +97            | +0.83%  |
| 1Y    | Dec 2026 | 1.1952       | +176           | +1.50%  |
| 18M   | Jun 2027 | 1.2017       | +241           | +2.05%  |
| 2Y    | Dec 2027 | 1.2081       | +305           | +2.59%  |
| 3Y    | Dec 2028 | 1.2201       | +425           | +3.61%  |

<figure><img src="/files/tsOEuf9uUS9AiZYkKPM5" alt="EUR/USD Forward Curve showing upward slope from spot at 1.1776 to 3Y forward at 1.2201"><figcaption><p>EUR/USD forward curve showing EUR trading at a forward premium to USD</p></figcaption></figure>

The upward-sloping curve reflects that EUR interest rates are lower than USD rates — so EUR trades at a **forward premium** (worth more in the future).

{% hint style="info" %}
**View live charts:** See interactive FX forward curves in the [BlueGamma app](https://app.bluegamma.io/foreign-exchange/eurusd).
{% endhint %}

***

## Data Sources

BlueGamma sources FX forward data from institutional market data providers:

* **Spot rates** — Real-time interbank mid-rates
* **Forward points** — Derived from interbank forward markets
* **Cross rates** — Calculated via USD crosses where direct quotes unavailable

### Interpolation

For dates between standard tenors, we interpolate forward points linearly to provide rates for any future date.

***

## Using FX Forwards in BlueGamma

### API

**Get spot rate:**

```bash
curl "https://api.bluegamma.io/v1/fx?currency_pair=EURUSD" \
  -H "x-api-key: your_api_key"
```

**Response:**

```json
{
  "currency_pair": "EURUSD",
  "rate": 1.1776
}
```

**Get forward rate:**

```bash
curl "https://api.bluegamma.io/v1/fx_forward?currency_pair=EURUSD&date=2026-06-15" \
  -H "x-api-key: your_api_key"
```

**Response:**

```json
{
  "currency_pair": "EURUSD",
  "date": "2026-06-15",
  "rate": 1.1873
}
```

### Excel Add-in

```
=BlueGamma.FX_RATE("EURUSD")
=BlueGamma.FX_FORWARD_RATE("EURUSD", "2026-06-15")
```

***

## Supported Currency Pairs

BlueGamma supports major and emerging market currency pairs:

### G10 Currencies

| Pair   | Description                    |
| ------ | ------------------------------ |
| EURUSD | Euro / US Dollar               |
| GBPUSD | British Pound / US Dollar      |
| USDJPY | US Dollar / Japanese Yen       |
| USDCHF | US Dollar / Swiss Franc        |
| AUDUSD | Australian Dollar / US Dollar  |
| USDCAD | US Dollar / Canadian Dollar    |
| NZDUSD | New Zealand Dollar / US Dollar |
| EURGBP | Euro / British Pound           |

### Emerging Markets

| Pair   | Description                    |
| ------ | ------------------------------ |
| USDBRL | US Dollar / Brazilian Real     |
| USDMXN | US Dollar / Mexican Peso       |
| USDZAR | US Dollar / South African Rand |
| USDTRY | US Dollar / Turkish Lira       |
| USDKRW | US Dollar / South Korean Won   |

Cross rates (e.g., EURNOK, GBPJPY) are calculated via USD triangulation.

***

## Common Use Cases

| Use Case                  | Description                                               |
| ------------------------- | --------------------------------------------------------- |
| **FX hedging**            | Lock in future exchange rates for known cashflows         |
| **Foreign currency debt** | Model repayments in home currency terms                   |
| **Cross-border M\&A**     | Value foreign acquisitions with forward FX assumptions    |
| **Revenue forecasting**   | Convert foreign revenue projections to reporting currency |
| **Transfer pricing**      | Set intercompany FX rates for budgeting                   |

***

## Related Documentation

* [Interest Rate Curves](/documentation/methodology/how-to-bootstrap-the-yield-curve.md) — The interest rates that drive FX forwards
* [Downloading FX Forward Rates](/documentation/market-data-guides/downloading-fx-forward-rates.md) — How to download FX data from the app
* [API Reference](/documentation/integrations/api/api-reference.md) — Complete API documentation


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