What's a spot rate?
A spot rate refers to the current exchange rate at which a currency can be bought or sold for immediate delivery or settlement. It represents the prevailing market rate for a particular currency pair at a specific point in time. Spot rates are typically used for immediate transactions or for calculating the present value of future cash flows in financial analysis.
Spot rates are quoted in currency pairs, such as USD/EUR or GBP/JPY, and indicate how much of one currency is needed to buy or sell a unit of another currency. For example, a spot rate of 1.20 USD/EUR means that one U.S. dollar can be exchanged for 1.20 euros.
These rates are determined by various factors, including supply and demand dynamics, interest rate differentials between countries, economic indicators, geopolitical events, and market sentiment. Spot rates can fluctuate frequently throughout the trading day in response to changing market conditions.
Spot rates are quoted in currency pairs, such as USD/EUR or GBP/JPY, and indicate how much of one currency is needed to buy or sell a unit of another currency. For example, a spot rate of 1.20 USD/EUR means that one U.S. dollar can be exchanged for 1.20 euros.
These rates are determined by various factors, including supply and demand dynamics, interest rate differentials between countries, economic indicators, geopolitical events, and market sentiment. Spot rates can fluctuate frequently throughout the trading day in response to changing market conditions.
Updated on: 30/11/2023
Thank you!