ABSTRACT
The one-or two-day delivery period for spot foreign currency is so short that when comparing spot rates with forward exchange rates we can usefully think of spot rates as exchange rates for undelayed transactions. On the other hand, forward exchange rates involve an arrangement to delay the exchange of
currencies until some future date. A useful working definition is:
The forward exchange rate is the rate that is contracted today for the exchange of currencies at a specified date in the future.
