Foreign Exchange Market - Spot Rates and Forward Rates

Spot transactions involve the exchange of currencies for immediate delivery. (T + 2 delivery)

The exchange rate used for spot transactions is referred to as the spot exchange rate, the exchange rate that most people refer to in their daily lives.

Outright forward contracts (often referred to simply as forwards) are agreements to deliver foreign exchange at a future date at an exchange rate agreed upon today.

Exchange rates for these transactions are called forward exchange rates.