Spot exchange rate:

1) The spot exchange rate refers to the current rate at
which the transactions to buys and sell of one
currency for another between the two parties takes
2) Such a market where transactions takes place on
current rate is known as Spot exchange market.
3) It can be also term as todays rate at which the
currencies can be traded.
4) In spot exchange rate system, the standard
settlement period is of two days because of
processing and paperwork. For example, if spot deal
takes place on Monday then the delivery will take
place on Wednesday, provided that both the
Tuesday and Wednesday are working days.
5) In spot exchange market the dealer quote two price
For example, INR /USD 61.50 bid/61.75 ask.
In the above example the bid refers to price which
the dealer is ready to pay for I USD, i.e. it is the
buying price of 1 USD and ask refers to price at
which the dealer is willing to sell 1 USD.
6) The spot exchange transactions account for two-
third of all international foreign exchange
7) In such a market the margin is less but the
transactions take place at lightning speed.

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