Kindly explain direct quotations.
1 answersQuestion asked ( July 27, 2009 , Shopping / Finance )
I recently got gifted $1000. I’m looking to translate it to my local currency (francs). I’m a little worried as i have never built with foreign currency before. I wish to gain some insights on the meaning of direct quotations to be able to make a meaningful conversation with the foreign exchange retailer?
Answers to : Kindly explain direct quotations....
Answer
When a fixed amount of foreign currency is quoted against a variable amount of domestic currency, it is called as direct quotation or European quotation. In all direct quotations the USD is standard foreign currency.
Example- USD/CHF rate of 1.5224 means
USD (US dollars) is the base currency and CHF (Swiss francs) is the quote currency. Base currency is always the first currency. Here $1 can be exchanged for 1.5224 Swiss francs.
When a fixed amount of domestic currency is quoted against a variable amount of foreign currency, it is called as indirect quotation or American quotation.
Example- GBP/USD rate of 1.5959 means
UK Sterling 1 can be exchanged for $1.5959.
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