FX Forward Quant Interview Guide
FX forward quant interview guide for forward contracts, forward points, interest differentials, settlement, hedging, examples, and caveats.
Candidates discussing FX forwards, hedging, funding, and no-arbitrage intuition.
Forwards lock a future exchange rate
An FX forward is an agreement to exchange currencies at a future date at a rate agreed today. Pricing connects spot, rates, and funding assumptions.
Forward points reflect rate differences
The forward rate can be quoted as spot plus forward points. The sign and size depend on interest rate differentials and market conventions.
Concrete example
If one currency has a higher interest rate, its forward price often reflects that funding difference under covered-interest-style reasoning.
Hedging is not costless
Using forwards can reduce currency exposure but introduces roll, credit, liquidity, collateral, and basis considerations depending on context.
Common mistakes
Candidates often treat forwards as forecasts. A forward rate is a tradable contract price under assumptions, not a guaranteed future spot prediction.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.