The spot rate is the price of a currency for immediate delivery. Transactions involving the spot rate are usually concluded within two business days although the spot rate may be used for pricing on longer-term transactions as well.
The foreign exchange market is where different currencies are traded against each other. The prices of currencies are determined by supply and demand. The spot market is the largest and most liquid market in the world with trading occurring around the clock.
The spot market can be used to hedge currency risk or to take a position in the market. A company that exports goods to another country may want to hedge against the risk of a unfavorable change in the exchange rate.
An investor may want to take a position in the market if they believe that the currency will appreciate.
What is the spot rate?
What is the definition of the spot rate?
What is the formula for the spot rate?
What is the spot rate used for?
How is the spot rate determined?
What factors can affect the spot rate?
What is an example of the spot rate?
What is the difference between the spot rate and the forward rate?
What is the difference between the spot rate and the interest rate?
How is the spot rate affected by inflation?
How is the spot rate affected by the political climate?
How is the spot rate affected by economic conditions?
What is the risk involved in investing in a foreign currency?
What are some strategies for hedging against currency risk?
What are some factors to consider when investing in a foreign currency?