The spot rate is the exchange rate for a currency trade settled now, rather than at a future date. It is the rate most people mean by ‘the exchange rate’, and the figure quoted on conversion pages, as opposed to forward rates agreed for settlement later.
In wholesale markets, "now" formally means settlement within two business days, a convention left over from the era of paper confirmations. For consumers the distinction is invisible: a card payment abroad or an online transfer is priced off the spot market at the moment it happens.
The contrast is with forward rates, where two parties agree today on a rate for an exchange that will happen months ahead. Forwards are a tool businesses use to remove uncertainty from future payments; they embed interest-rate differences between the two currencies, so they are not a forecast of where the spot rate is heading.
Take a spot rate of 0.64, meaning one Australian dollar buys 64 US cents. Set one-year interest at 4 per cent on the Australian dollar and 5 per cent on the US dollar. Multiply 0.64 by 1.05, divide by 1.04, and the one-year forward comes out at 0.6462. The Bank for International Settlements sets out the principle behind that sum, covered interest parity: the interest gap between two currencies in the cash money markets should match the gap between their forward and spot rates. The forward lands above the spot here only because the US dollar pays a percentage point more over the year. Swap the two interest rates and it lands below, by a similar distance.
The live figures across Tradergy’s pair pages are spot references: the current mid-market price of the exchange, not a prediction of any future one.
Longer read: What the wholesale currency market is, and where a quoted rate comes from. Every rate anybody is quoted began as a price between institutions. Who those institutions are, how much they trade, why most of it is never visible, and what the two-day settlement convention means.
The practical companion to this definition is the currency converter pages.
Related terms
Mid-market rate · Interbank rate · Floating exchange rate · All terms
Primary authority: RBA exchange-rate statistics. Definition reviewed against the authority’s published material; this page is reference information, not advice.
Common questions
Is the spot rate the rate I get at the bank?
No. The spot rate is the wholesale market price. A bank or transfer provider starts from it, then applies its own margin and fees, so the retail rate you are quoted will always sit somewhat away from the spot figure.
Do forward rates predict future spot rates?
No. A forward rate reflects today’s spot rate adjusted for the interest-rate difference between the two currencies over the period. It is the arithmetic cost of locking a rate in, not the market’s forecast of where the spot rate will be.
When does a card payment actually get its spot rate?
When the transaction is processed by the card network, which can be a day or more after the purchase. The rate applied is the network’s rate at processing time plus the card issuer’s international fee, not the rate at the moment of tapping.