Spot exchange rates


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Spot exchange rates

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.
References in periodicals archive ?
Forward exchange rate contracts are used, among other things, to eliminate future spot exchange rate risk.
The focus of these approaches was mainly on whether (a) a spot exchange rate for a currency behaves as a random walk or whether the foreign exchange market is weak-form efficient (b) the forward rate for a currency is an unbiased predictor of the future spot exchange rate for that currency or whether the foreign exchange market is semi-strong form efficient and (c) there are cointegrating relationships among several currencies or whether the foreign exchange market is semi-strong form efficient.
Table 1 Yen Spot Exchange Rate Before crisis after crisis Mean 107.8485 [yen]/$ 89.2825 [yen]/$ S.D.
(11.) The forward premium is the percentage difference between the forward rate and the spot exchange rate.
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,
(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.
Then we generate the daily real exchange rate series by multiplying the daily spot exchange rate series with the exporting country to domestic country price ratio.
Because the forward price is linked to the spot price through covered interest parity, intervention in the forward market can influence the spot exchange rate.
and Mark Taylor (1996), `The Term Structure of Forward Exchange Premia and the Forecastability of Spot Exchange Rates: Correcting the Errors', Liverpool Research Paper No.
That notion was extended to hedges of foreign-currency instruments remeasured at current spot exchange rates with the resulting gain or loss reported in earnings.
Since the country risk indexes are only updated monthly, we construct monthly averages of the daily percentage bid-ask spreads along with the monthly standard deviations of the daily percentage changes of the spot exchange rates for all 36 currencies.
Copeland (1991) tests five daily spot exchange rates for consistency with the EMH.