Currency Conversion
Currency conversion translates an amount from one currency into another using a stated exchange rate, quote direction, and transaction terms.
Currency-conversion and forward-pricing conventions for reading spot quotes, forward points, and relative currency rates.
FX conversion and forward-pricing conventions explain how to translate a currency amount and how an exchange rate for a future value date relates to spot. The pair order, quote units, bid or ask, value date, and calculation purpose must be stated before the number can be interpreted.
Use Currency Conversion to determine whether an amount should be multiplied or divided by a rate and why a customer rate can differ from a reference rate. Use Forward Points to move from spot to an outright forward and to interpret forward margin, premium, and discount language. Interest Rate Differential explains the relative-rate input without treating it as a forecast or guaranteed carry return.
| Task | Core calculation | Essential check |
|---|---|---|
| Convert base to quote currency | amount × exchange rate | quote is stated as quote currency per base currency |
| Convert quote to base currency | amount ÷ exchange rate | reciprocal direction and bid-ask side are correct |
| Build an outright forward | spot rate + forward-point adjustment | spot and points use the same pair, side, scale, and value dates |
| Compare currency rates | rate A − rate B | maturity, compounding, credit, and subtraction order are matched |
| Measure an FX move | rate change ÷ pip size | pip scale and monetary exposure are stated |
Currency Pair defines the base and quote currencies. Cross Rate explains conversion through an intermediate currency. Pip covers small price moves, while Covered Interest Parity develops the no-arbitrage framework behind spot and forward pricing.
This section is for financial education only. It does not provide investment, trading, accounting, tax, legal, or individualized hedging advice.
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Currency conversion translates an amount from one currency into another using a stated exchange rate, quote direction, and transaction terms.
Forward points are the quoted difference between an FX spot rate and an outright forward rate, expressed in the currency pair's rate units.
An interest rate differential is the difference between comparable rates in two currencies and a key input in FX forward and carry analysis.