What are Forward Points in Currency Trading?

Forward points are the basis points added to or subtracted from the current spot rate of a currency pair to determine the forward rate for delivery on a specific value date. This is also known as the forward spread. Forward points are used to calculate the price for both an outright forward contract and a foreign currency swap. In contrast to the forward spread, a discount spread is the currency forward points that are subtracted from the spot rate to obtain a forward rate for a currency.
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