Using the covered interest rate parity with discrete compounding: $F = S \times \frac{1 + R_{domestic}}{1 + R_{foreign}}$

Here, CAD is the domestic currency (quote currency in USD/CAD 1.21), and USD is the foreign currency (base currency). $S = 1.21$ $R_{CAD} = 1\% = 0.01$ $R_{USD} = 3\% = 0.03$

$F = 1.21 \times \frac{1 + 0.01}{1 + 0.03}$ $F = 1.21 \times \frac{1.01}{1.03}$ $F \approx 1.21 \times 0.98058 \approx 1.1865$ CAD per USD.