Exchange Rate Quotations Assume a South African bank has the following exchange rate quotations for the USD and the South African rand (ZAR): Spot 9.8565-10.0545 3 months Forward 500-350 In the above case, the ZAR is the domestic currency and the USD is the foreign currency. The spot quotation is a full direct quote for the USD since it gives the ZAR price of each USD unit (i.e. ZAR 9.8565=USD1 ). The lower quote of 9.8565 is the bid quote since the bank would want to pay less ZAR for each USD unit bought from customers. The higher quote of 10.0545 is the ask quote since the bank would want to receive more ZAR for each USD unit sold to customers. The difference between spot ask and bid quotes is the spot bid-ask spread (1980 points. The forward bid-ask spread is the sum of the spot bid-ask spread and the positive difference between the forward points (i.e. 1980+150=2130)
