Forward outright

A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate minus or plus the forward points for the chosen period. The forward foreign exchange rate for two currencies assuming simple interest rates can be expressed by: Ft = St * [1 + (rd x T - t) x 1/Dd] / [1 + (rf x T - t) x 1/Df] where Ft = the forward rate St = the spot rate (direct quotation) rd= the domestic interest rate rf = the foreign interest rate Dd= the daycount in the domestic currency Df= the daycount in the foreign currency T = the maturity of the forward contract t = the current time such that T - t = the life of the forward. (Note: rd and rf are spot i.e. zero coupon interest rates. For indirect quotations the foreign currency interest rate would be the numerator and the domestic currency rate would be the denominator.)