What is a direct quote?
Direct quote, also called a quotation (although the price offer is also used to indicate other things), the exchange rate is quoted as a domestic currency for a foreign currency. The target course expresses the currency of one country or money in terms of the currency of another country and is usually quoted in 4 to 6 decimal places. For example, France uses Euro (EUR), and it is assumed that the euro as a unit was worth half the US dollar (USD). In the US, a direct quote for France would be $ 0.5 per euro. In France or in any country that uses the euro as its currency, a direct quote for the US would be EUR 2 per dollars. This also means that if a person from France wanted to exchange EUR 500 for USD, he would get $ 250 back. If a US person traded $ 500 per EUR, he gets back 1,000 euros.
Most countries, including the United States, use a direct quote to express exchange rates. Other countries, howeverThey use the euro as a currency. Indirect quotations report a exchange rate in a foreign currency to the domestic currency. Using the above hypothetical situation, therefore, an indirect quote in France for the United States would be $ 0.5 per euro.
When thinking about exchange courses, it is useful to think of tailor -made as a fraction. For a direct quote, this would mean putting the basic currency to the bottom and the top of the date. The basic currency or currency currency currency is a currency created on a straight 1 and the date of the currency or price currency is compared with the basic currency. In the hypothetical situation, the fraction would look like this for direct quote from the United States to France: $ 0.5/EUR.
However, this is not correctly written. Abbreviation for the basic currency goes directly before the abbreviation for the term currency. If you want to use the same example, write a direct quote for the exchange rate in the United States for France, he would write that Eurusd is 0.5. The order of the fraction is reversed. WhetherYou write a direct or indirect quote, the basic currency is the first and the date of the currency is second.When expressing a direct quotation, the exchange rate has an inverse relationship with the value of the domestic currency. This shows more clearly when looking at the equation used to find a direct exchange rate quote:
Exchange rate = home currency / foreign currency.
Assuming that the foreign currency remains constant if the value of domestic money, which is also the date of the currency, rises or appreciates, the exchange rate drops. If the domestic currency value drops, the exchange rate will increase. Alternatively, if the basic currency rises and the domestic currency remains, the exchange rate will increase, and if the foreign currency decreases, the exchange rate will drop.