Characteristics of spot foreign exchange transactions
Spot foreign exchange transactions can also be used to adjust the proportion of foreign exchange positions held by different currencies to avoid foreign exchange risks. For example, a country's foreign exchange reserves account for a large proportion of US dollars, but in order to prevent losses caused by the decline of US dollars, it can sell some US dollars and buy other currencies such as Japanese yen and German mark to avoid foreign exchange risks. In addition, spot foreign exchange transactions are also used for foreign exchange speculation.