Currency Quote – Foreign Currency Rate

Global Market Astro has made it efforts to give a brief note on foreign exchange and in explaining the terms commonly used in foreign currency exchange market.

FOREIGN EXCHANGE

Foreign exchange may be briefly defined as exchange of one currency for another or the conversion of one currency into another currency. The term foreign exchange is abbreviated as “forex” and as “FX.”

FOREIGN EXCHANGE MARKET

The marketers, in which the participants are able to buy, sell exchange and speculate on currencies. The Foreign exchange market participants are generally banks, commercial companies, central banks, hedge funds, investment management firms, and retail Forex brokers and investors. The foreign exchange markets are highly liquid and are the largest financial market, with average daily trade volumes in trillions of dollars. It is not specified to a particular exchange and operates 24 hours around the clock.

CURRENCY QUOTE-DEFINED

The Currencies conversion rates are quoted in pairs, for example the USD/GBP is the U.S. dollar/Pound. Using this quotation, the value of one currency is determined by its comparison to another currency. The first currency of a currency pair is called the base currency, and the second currency is called the quote currency. The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.

For example:  if the USD/GBP currency pair is quoted as being USD/GBP = 0.8000 and you purchase the pair; this means that for every 0.80 Pounds you sell, you purchase US$1. If the currency pair is sold, you will receive 0.80 Pounds for every US$1 you sell. The inverse of the currency quote is GBP/USD, and the corresponding price would be GBP/USD = 1.25, meaning that US$1.25 would buy 1 pound.

DIRECT QUOTE

The quote currency is the foreign currency in a direct quote. A foreign exchange rate quoted as the domestic currency for a unit of foreign currency. In other words, it involves quoting in fixed units of foreign currency against variable amounts of the local currency.
For example, in the U.S., a direct quote for the Australian dollar would be US$0.85 = AUD$1. On the other hand, in Australia, a direct quote for U.S. dollars would be AUD$1.17 = US$1.

INDIRECT QUOTE

The quote currency is the domestic currency in an indirect quote. A currency quotation in the foreign exchange markets that states the amount of foreign currency required to buy or sell one unit of the domestic currency.

Source : https://www.globalmarketastro.com/blog/currency-quote-foreign-currency-rate/