What is the definition of the spot rate?

The spot rate refers to the present exchange rate at which a currency can be bought or sold for immediate delivery. It reflects the current market price for a currency pair, allowing traders to convert one currency into another right away. This is fundamental for financial institutions and businesses that need to perform transactions based on current exchange rates rather than future expectations. Understanding the spot rate is crucial for effective currency risk management and financial decision-making.

In contrast, the other choices describe concepts related to future transactions, historical data, or averages, which are not relevant to the immediate, current exchange rate that defines the spot rate.