💱 Spot Transaction
US Capital Private Bank Knowledge Base
Definition:
A Spot Transaction is a foreign exchange deal where foreign currency is purchased at the current exchange rate and delivered within two business days from the transaction date.
Key Points:
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The transaction is settled "on the spot," meaning quickly and promptly.
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Commonly used for immediate currency needs in international trade or investment.
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The exchange rate agreed upon is known as the spot rate.
Typical Settlement:
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Usually, delivery and payment occur within two business days after the trade date.
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This rapid settlement distinguishes spot transactions from forward or futures contracts, which settle at a later date.
Importance:
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Spot transactions allow businesses and individuals to manage currency exposure efficiently.
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Reflects real-time market exchange rates.
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