Spot exchange rates are the rates that are applicable for purchase and sale of foreign exchange on spot delivery basis or immediate delivery basis. The term spot denotes immediate happening and closing of transaction, practically it takes two business days for a spot exchange transaction to get settled.
Forward exchange rates, in contrast, are the rates that are applicable for the delivery of foreign exchange at a certain specified future date. For example, a
foreign exchange
contract may specify that the payment has to be settled after 3
months, or it may be a 90-day maturity contract.