Spot foreign currency /CNY exchange means that bank offers currency exchange between major foreign currency and CNY, according to the quoted FX rate and clients’ instruction.
For one Client need to sell USD/ buy CNY regularly, even the fluctuation of USD/CNY rate in daytime may influence its profit margin. So the client will give a call to bank to get information about the latest market information, and then make dealing instructions on their own judgment.
Forward foreign currency /CNY exchange means that bank offers forward exchange contract to clients for whom to be able to get transfer between foreign currency and CNY at a certain FX rate in the future. And both parties must implement the contract at the delivery day.
If exchange rate goes in the reverse direction, the clients may lose the chance to get a better FX rate because of the fixed exchange rate in the contract.
One corporate has 10million USD revenue half a year later. Now the USD/CNY rate is around 8.0900, the client makes a contract with the bank to sell the USD at 7.900 in half a year in case of the loss from CNY appreciation. The client has a fixed FX rate to avoid the USD/CNY rate risk.