The Export Company just made an agreement with the Import Company to exchange dollars for yen based on the current oﬃcial exchange rate. The exchange will settle tomorrow. This is an example
Of a:

Question

Quizplus · Accepted Answer

The exchange that will settle tomorrow based on the current official exchange rate is a spot trade. A forward trade involves an agreement to exchange currencies at a specified future date and rate, while a forward exchange rate is the agreed-upon rate for a future currency exchange. Arbitrage trade involves taking advantage of price differences in different markets, and a cross trade involves trading between two different currency pairs without using the US dollar as an intermediary.

The Export Company Just Made an Agreement with the Import