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Thursday, June 18, 2009

The Types of Foreign Exchange Markets

* The Spot Market:
In the spot market, dealers of foreign exchange transactions have to deliver and receive currencies at the immediate moment. The rate of exchange used in these transactions is the spot exchange rate
* The Forward Mark
A forward transaction is an agreement (called the forward-exchange contract) between two parties which requires the delivery of one currency for anther at some future date (one month, two months,… ahead), and at a price used is called the forward exchange rate.

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