The foreign exchange outright rate is the exchange rate of a currency forward contract. A currency forward is an agreement to buy or sell a specified amount of one currency against payment in another currency at a fixed future date known as the value date. The foreign exchange outright rate is fixed at the time the contract is entered into. It reflects the interest rate differential between the two components of a currency pair. The currency with the higher interest rate trades at a forward discount with respect to the other. For example, if the spot USD-MXN rate is 20.5000, and one-year interest rates are 1.5% in USD and 7.5% in MXN, then the one-year foreign exchange outright rate is 21.7188 = 20.5000 (1.075/1.015). The foreign exchange outright rate always is exactly set at a level that makes riskless arbitrage impossible.