Forward Margin

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DEFINITION

The difference between the spot rate and the estimated future rate for a certain commodity. The forward margin on foreign currency, for instance, would typically be specified as number of points over or under the spot rate.

INVESTOPEDIA EXPLAINS

The difference between the two rates can either be a premium or a discount depending if its above or below the spot rate. If you add or subtract the forward margin to the spot rate, you would get the forward rate.


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