Spot Exchange Rate

Related to Spot Exchange Rate: hedging, Forward exchange rate

Spot Exchange Rate

The exchange rate for which two parties agree to trade two currencies at the present moment. The spot exchange rate is usually at or close to the current market rate because the transaction occurs in real time and not at some point in the future. Some analysts believe that forward rates are an accurate predictor of future spot rates, though many others dispute this. See also: Forward exchange.

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A rational investor in country i, starting with one unit of her home currency, would compare the following two alternatives: firstly, keeping her home currency and earning an annual (continuous) domestic interest rate, [r.sub.D], on their domestic deposits and ending up with [e.sub.rDT] units home currency after 365T days; or secondly, converting her home currency at the spot exchange rate, [S.sub.t], earning an annual (continuous) foreign interest, [r.sub.F], on deposit in country j, and then after 365T days exchange currency j for currency i at the previously negotiated forward exchange rate, [F.sub.t;t+T].

Liquidity, information and the size of the forward exchange rate bias

Masih (1996), "Common Stochastic Trends, Multivariate Market Efficiency and the Temporal Causal Dynamics in a System of Daily Spot Exchange Rates," Applied Financial Economics 6(6): 495-504.

Efficiency of foreign exchange market of Sri Lanka: some empirical evidence

dollars is estimated to be 15%, and the spot exchange rate is [S.sup.D/USD] = 11.72.

Currency choices in valuation: an approach for emerging markets

The model can explain the forward premium puzzle and several other stylized facts related to the joint behavior of forward and spot exchange rates. It is also consistent with the availability of profitable carry-trade strategies.

Understanding the profitability of currency-trading strategies

where [E.sub.t] ([s.sub.t+k]|[[OMEGA].sub.t]) = logarithm of expected spot exchange rate at time t + k, based on information known at time t,

Foreign exchange market efficiency. Empirical results for the USD/EUR market

RIP theory is a cornerstone of assessing the efficiency of foreign exchange markets, linking interest rates, spot exchange rates, and foreign exchange rates.

The integration of financial markets in GCC countries

(3) The series of the expected exchange rate (E[S.sub.t+1]) was obtained by forecasting the time series of the spot exchange rate under the uncovered interest parity.

Market instability and revision error in risk premium

dollars, which are then converted into local currency units using the spot exchange rate in relation to the U.S.

Does real exchange rate volatility affect sectoral trade flows?

(18) This is to confirm that expectations on spot exchange rate changes in the near future, a 3-mo horizon, seem to play a more important role than the level of real exchange rates in determining FDI inflows into Korea.

The determinants of Korea's foreign direct investment from the United States, 1980-2001: an empirical investigation of firm-level data

dollars at the end-of-month spot exchange rate. The

Emerging market liberalization and the impact on uncovered interest rate parity: Table 2 summary statistics of currency excess returns

* The Eun and Reswich monetary approach is discussed along with the empirical equation for the natural logarithm of the spot exchange rate, but none of this material gives management any practical tools with which to run a MNC.