Which of the following is the opposite of spot transactions in the currency exchange market?

Spot transactions in the currency exchange market refer to the immediate exchange of currencies at the current market rate, typically settled within two business days. The opposite of spot transactions involves agreements to exchange currencies at a predetermined rate at a future date.

Forward transactions are specifically designed for this purpose. In a forward transaction, two parties agree on a currency exchange rate today, but the actual exchange will occur at a set date in the future. This type of transaction allows businesses and investors to hedge against the risk of currency fluctuations, making it a critical financial tool for international trade and investment. The predictability of the future exchange rate is what makes forward transactions the counterpart to spot transactions in this market.

Instalment transactions do not directly relate to the currency exchange but rather to the purchase of goods and services. Future transactions, though they sound similar, typically refer to contracts related to commodities and financial instruments rather than currency exchange. Swap transactions involve exchanging one set of cash flows for another at specific times without a direct focus on future currency exchange rates. Thus, forward transactions are indeed the most accurate counterpart to spot transactions in the currency exchange market.