Spot Rate
The current exchange rate for immediate delivery.
The spot rate is the prevailing exchange rate for a currency pair for settlement typically within two business days (T+2). It reflects current supply and demand conditions in the foreign exchange market. Spot rates are the basis for pricing all FX derivatives and forward contracts.
Cross Rate
An exchange rate between two currencies derived via a third common currency.
FX Volatility
Standard deviation of exchange rate changes — typically 5-15% annually.
FX Risk
Risk from exchange rate fluctuations affecting foreign-denominated assets.
Currency Exposure
The fraction of portfolio value exposed to a foreign currency.
FX Correlation
How currencies move with assets or other currencies — key for diversification.
Base Currency
The reference currency in which portfolio values are expressed.