Why are the bid—ask spreads quoted in the interbank spot market? What is their purpose?

What will be an ideal response?

Answer: The purpose of the bid-ask spread is to allow traders to profit by buying a currency at a low bid price and selling that currency at a higher ask price. Bid—ask spreads in the spot foreign exchange market are quite small, often a difference of only two or three basis points. A yen—dollar trader might quote a bid price of yen per dollar at which she is willing to buy dollars in exchange for yen of, say, ¥104.30/$. The trader would then quote a higher ask price at which she is willing to sell dollars for yen, say, at an exchange rate of ¥104.35/$.