Equilibrium spot exchange rate formula
Spot Exchange Rate: A spot exchange rate is the price to exchange one currency for another for immediate delivery. The spot rates represent the prices buyers pay in one currency to purchase a Covered interest rate parity refers to a theoretical condition in which the relationship between interest rates and the spot and forward currency values of two countries are in equilibrium. Spot exchange rate (or FX spot) is the current rate of exchange between two currencies. It is the rate at which the currencies can be exchanged immediately. According to the definition, delivery is theoretically immediate; however, conventions of currency markets allow for up to two days for settlement of a transaction.