Spot Exchange Rate
What is the spot exchange rate? What is the settlement cycle?
The spot exchange rate is the amount, in another currency, a buyer expects to pay for a foreign currency. A spot exchange rate is “spot” because it is supposed to theoretically immediate, but in reality foreign-exchange contracts are generally settled in two days. This two-day period is known as the settlement cycle.
The spot exchange rate is sometimes called the “benchmark rate” or “outright rate.”