What defines the 'Spot rate'?

The 'Spot rate' refers to the current exchange rate at which one currency can be exchanged for another currency for immediate delivery. This means that if you were to exchange currencies right now, the spot rate would determine how much of one currency you would receive in exchange for another.

This rate is essential in the foreign exchange market, as it reflects the real-time value of currencies based on current market conditions, including demand and supply dynamics. It is distinguished from future rates, which would apply to transactions settled at a later date, and historical or average rates that do not represent the current market situation. Thus, option A accurately captures the essence of the spot rate as the price for immediate currency exchange.