|
|
Spot
rate |
Forward
rate |
|
|
The spot rate refers to the rate for a currency
exchange that is settled and delivered immediately. |
A forward rate is the rate accepted between two
parties when a currency exchange will be settled at a date in the future. |
|
|
Spot
rates are for a period of time starting today. |
Forward
rates are for a period of time that starts at some point in time in the
future (not today) |
|
|
The
spot exchange range is simply the current exchange rate as opposed to the
forward exchange rate. |
Forward
exchange rate essentially refers to an exchange rate that is quoted and
traded today but for delivery and payment on a set future date |
|
|
Calculating
this spot rate exchange rate is easy |
Calculating
this forward exchange rate is the difficult part because how can you predict
the future |