An exchange rate thus has two components, the domestic currency and a foreign currency, and can be quoted either directly or indirectly. In a direct quotation, the price of a unit of foreign currency is expressed in terms of the domestic currency.
In an indirect quotation, the price of a unit of domestic currency is expressed in terms of the foreign currency. An exchange rate that does not have the domestic currency as one of the two currency components is known as a cross currency, or cross rate. Also known as a currency quotation, the foreign exchange rate or forex rate.
An exchange rate has a base currency and a counter currency.
In a direct quotation, the foreign currency is the base currency and the domestic currency is the counter currency. In an indirect quotation, the domestic currency is the base currency and the foreign currency is the counter currency.
Most exchange rates use the US dollar as the base currency and other currencies as the counter currency. However, there are a few exceptions to this rule, such as the euro and Commonwealth currencies like the British pound, Australian dollar and New Zealand dollar.
Exchange rates for most major currencies are generally expressed to four places after the decimal, except for currency quotations involving the Japanese yen, which are quoted to two places after the decimal.
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Exchange rates can be floating or fixed. While floating exchange rates — in which currency rates are forex lessons uk by market force — are the norm for most major nations, some nations prefer to fix or peg their domestic rupiah forex chart to a widely accepted currency like the US dollar.
Exchange rates can also be categorized as the spot rate — which is the current rate — or a forward ratewhich is the spot rate adjusted for interest rate differentials. Dictionary Term Of Fastest way to earn money in red dead redemption Day.
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Here the base currency is the US dollar and the counter currency is the Canadian dollar. In Canada, this exchange rate would comprise a direct quotation of the Canadian dollar. This is easy to understand intuitively, since prices of goods and services in Canada are expressed in Canadian dollars; therefore the price of a US dollar in Canadian dollars is an example of a direct quotation for a Canadian resident.
Exchange Rates Graph (Indonesian Rupiah, Euro) - X-Rates
Here, since the base currency is the Canadian dollar and the counter currency is the US dollar, this would be an indirect quotation of the Canadian dollar in Canada.
For an investor based in Europe, the Canadian dollar to yen exchange rate constitutes a cross currency rate, since neither currency is the domestic currency. Indirect Quote European Currency Quotation American Currency Quotation Quote Currency Base Currency International Currency Exchange Counter Currency Currency Currency Substitution.
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