The points that are added to or subtracted from the spot rate to calculate the forward rates for a forward foreign exchange transaction. These points are based on the differential between the interest rates of the two currency pairs.
Different countries will generally have different interest rates. When buying one currency against another for delivery at a future date, the bank or broker will adjust the spot (immediate delivery) price to take this variation into account. The sale of a low yielding currency (in a low interest-rate economy) and the purchase of a high yielding one will be reflected in a higher net price than the spot rate. This is described as "points on" for the forward adjustment. Obviously the opposite position results in a "points off" adjustment.
This is the difference between the spot and the forward price expressed in pips.
The interest rate differential between two currencies expressed in exchange rate points. These forward points are added to or subtracted from the spot rate to give the forward or outright rate
The pips added to or subtracted from the current exchange rate to calculate a forward price.
Percentage point additions or deductions from the spot price of a currency based on interest rate variances between the two countries.
Refers to the pips that were added to or subtracted from the current exchange rate to obtain the forward price/rate.