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Currency Hedging Calculator
For international trade: lock in today’s exchange rate for a future receivable or payable with a forward, or resolve a temporary currency liquidity mismatch with a swap — same no-arbitrage math, two different uses.
Forward hedging. If you have a receivable or payable in a foreign currency with a known future date, a forward lets you lock in today the exchange rate at which it will settle, eliminating currency risk on that transaction. The theoretical forward, under Covered Interest Rate Parity (CIP), is:
Without a hedge, the final result depends on where the exchange rate moves — with a hedge, the result is fixed as of today, in exchange for giving up a favorable move if there is one.
The rates shown are approximations — use your bank’s or forward broker’s real quote before deciding.
Forward = Spot × (1 + i_dom × t) / (1 + i_ext × t)Without a hedge, the final result depends on where the exchange rate moves — with a hedge, the result is fixed as of today, in exchange for giving up a favorable move if there is one.
The rates shown are approximations — use your bank’s or forward broker’s real quote before deciding.
Your Exposure Details
Days until settlement date
IBR or local funding rate
SOFR, €STR, or another reference rate
To size the risk the hedge removes
Hedge Result
Forward exchange rate (CIP)
$0
Forward points vs. spot
0
Cost/benefit of hedging
0%
Hedged
Guaranteed fixed amount
$0 COP
This value is locked in as of today, no matter where the exchange rate moves over the next 90 days.
Unhedged
Possible range (±2σ)
$0 – $0 COP
This is the range of possible outcomes if you wait for the exchange rate on the day, based on the historical volatility entered.
| Scenario | Exchange rate | Unhedged result | Forward result |
|---|---|---|---|
| Calculate to see scenarios | |||
Methodology: theoretical forward under Covered Interest Rate Parity (CIP); unhedged risk bands with a log-normal model centered on the forward, the best available market estimate under no-arbitrage conditions.
Criteriofinanciero.com.co
Criteriofinanciero.com.co
Currency swap. An FX swap combines a spot purchase/sale with the opposite forward transaction, in the same trade. It’s used to resolve a temporary currency liquidity mismatch — you have one currency today and need another, but only for a while — without taking on currency risk at reversal, because the reversion rate is fixed from the start, using the same CIP formula as the forward.
Under no-arbitrage, the cost of a currency swap and the cost of borrowing directly in the currency you need should match — the real difference in practice is in bank spreads and credit availability in each market, not in the theoretical rate.
Under no-arbitrage, the cost of a currency swap and the cost of borrowing directly in the currency you need should match — the real difference in practice is in bank spreads and credit availability in each market, not in the theoretical rate.
Swap Details
Days until reversal
E.g.: 1 COP = 0.000325 USD (equivalent to 3,080 COP/USD)
Swap Result
Spot exchange rate
0
Forward exchange rate (reversal)
0
Swap points
0
Implied annualized cost
0%
Via swap
Total swap cost
$0
Cost of getting the liquidity today and returning it in 60 days, in the currency you have.
Via direct loan
Cost of borrowing directly
$0
Theoretical cost of borrowing directly in the currency you need, at the same term — under no-arbitrage, it should be virtually equal to the swap.
Methodology: swap points and reversal forward under Covered Interest Rate Parity (CIP) — the same formula behind the forward market, applied to a liquidity trade instead of a receivable/payable hedge.
Criteriofinanciero.com.co
Criteriofinanciero.com.co