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Saturday, April 25, 2009

Direct and Indirect Quotes

On the currency exchange market in every country, the local currency is quoted directly or indirectly against the US Dollar and other foreign currencies.
  • The direct quoting is the amount of local currency needed to buy one unit of the foreign currency and the amount of local currency respectively due to be received when one unit of foreign currency is being sold. For instance, in Japan:

    120.44 – 120.52 USD/JPY

    This means that dealers are buying one dollar for 120.44 yen, but are selling it for 120.52 yen.

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