Spot Price Definition. A Spot Price is the current market price for a security, commodity or currency, generally settled in cash “on the spot” in a Spot Market. A Spot Forex Rate is the price for which a currency pair is bought or sold, typically transacted with a “2-day value date”, an international convention due to time zone differences and the need for banks to communicate cross-border to perform the transaction. Occasionally a “1-day value date” can be achieved when the complete trade is near or within the same time zone, as with USD trades for the Canadian Dollar of the Mexican Peso. If a position is left open overnight, a forex broker will typically rest the value date two business days out by closing and reopening the position at the same price, thereby preventing the actual delivery of currency to take place. The Spot Forex Rate is the rate that Retail forex brokers to do business with forex traders. It also differs from a forward rate, since that rate takes the spot rate and adjusts for interest considerations to give a price at a future point in time.
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