A spot contract is an agreement between you and your FX provider to buy foreign currency at the present exchange rate. This is the most common and traditional form of currency exchange and is suited to addressing any imminent currency transfer needs you may have. At Moneycorp, we can assist with your international spot payments, as well as offer a wider range of currency contracts.
What are the benefits of a spot trade?
Agreeing a spot contract allows you to secure the current exchange rate and make the payment without setting any exchange rate targets that may not be met. The immediacy of spot payments ensure your business is aware of its costs and currency exposure as soon as the transaction is made.
What is the difference between spot exchange rate and forward exchange rate?
A spot exchange rate is the current rate at which you have agreed your trade, whereas a forward exchange rate is a rate that you can lock in for an agreed period. This would mean that any movements, both up and down, would not affect the rate you’d locked in with a forward contract.
Why would I need a spot contract?
Exchange rates are constantly fluctuating, making sudden movements that are either in your favour or against your interests. When the rate does move in a favourable direction, a spot payment allows you to take advantage of it and ensure your exchange is made at your agreed rate.
For example, on the 13th December 2019, the GBP/EUR rate moved to 1.2046 after the result of the UK General Election was announced. Businesses that capitalised on this enjoyed an exchange rate buoyed by investor confidence, that would eventually retreat to 1.1767 within a week.
How can my business agree a spot contract for a payment?
Unless otherwise specified, every transfer made from your Moneycorp business account will be a spot trade. You will be offered a current exchange rate to accept before you process your payment. This allows for you to take advantage of the current rate and exchange currency at all hours.
Your multi currency account provides you with 24/7 access to your funds, while spot contracts can also be negotiated over the phone via our specialist team.