There are several different methods of foreign exchange rate quotation due to different standards.
The commonly used marking methods include direct marking method, indirect marking method and dollar marking method.Direct bidding method, also known as payable bidding method, is based on a certain unit (1, 100, 1000, 10000) of foreign currency as the standard to calculate how many units of local currency should be paid.
Price to explain
It is equivalent to calculating the amount of local currency payable for buying a certain unit of foreign currency, so it is called the bid price payable method.On international foreign exchange market, yen, Swiss franc, Canadian dollar are direct mark a price method, be like yen 119.05 namely 1 US dollar buys 119.05 yen.
Under the direct quotation method, if a certain unit of foreign currency is converted into more local currency than in the previous period, it indicates that the foreign currency value increases or the local currency value decreases, which is called the rise of foreign exchange rate.On the contrary, if you want to use less local currency than before, you can exchange the same amount of foreign currency, which shows that the value of foreign currency decreases or the value of local currency increases, which is called the foreign exchange rate decline, that is, the value of foreign currency is proportional to the rise and fall of the exchange rate.
Indirect quotation method is also called receivable quotation method.It is based on a certain unit (such as 1 unit) of the local currency as the standard to calculate the number of units of foreign currency receivable.In the international foreign exchange market, euro, pound sterling, Australian dollar, etc., are indirect pricing method.Euro 0.9705 is $0.9705.In the indirect quotation method, the amount of the domestic currency remains constant and the amount of the foreign currency changes with the relative change of the value of the domestic currency.
If a certain amount of local currency to exchange foreign currency amount less than the previous, this suggests that the rise in foreign currency, their currencies down, namely, foreign currency exchange rates to rise (should be “down”, or is the concept of “dislocation” or “strangeness”, the “foreign exchange” refers to “foreign currency” is refers to the value of domestic/foreign falling);Conversely, if a certain amount of local currency can be exchanged for more foreign currency than the previous period, it shows that the value of foreign currency decreases and the value of local currency rises, that is, the foreign exchange rate falls (rises), that is, the value of foreign currency and the rise and fall of exchange rate are inversely proportional.