Posted in Finance, Accounting and Economics Terms, Total Reads: 116
Definition: Spot Next
Spot Next is a term used in foreign currency trading that basically indicates that the price of the foreign currency will be determined by the actual valid date. It is basically a foreign exchange swap used by companies.
For example if Infosys makes a spot next today in US dollars and the rate for I USD to INR is Rs.68 and the delivery of the currency happens a day after then the Infosys will have to pay a price that is prevalent tomorrow and not today. This allows both the parties to get the actual price which prevails on the day of payment.
A Spot Next can also have a time period associated with it, for example spot one week refers to delivery after one week from today, and hence the amount will be calculated on the foreign currency rate that prevails after one week from today.