Forex Exchange rate quotes

Forex Exchange rate quotes:

There are two basic ways to contribute to the exchange rate quotations.

1st Direct quotation
2nd Indirect quote

City Forex:

- The rate at which currencies are traded for delivery the same day.

- Is the currency is the current rate at which a currency can be immediately converted into another currency.

- These prices are set by demand and supply forces in the foreign exchange market.

- A direct quote indicates the number of units of domestic currency required to buy one unit of foreign currency.

- An indirect quotation indicates the number of units of foreign currency that can be a substitute for one unit of domestic currency.

- An indirect quote is the inverse of the direct quote.

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- Indirect quote = 1
... ... ... ... ... ...
Direct quotation

Types of Item Pricing:

1st Ask Price:
- Is the speed with which the foreign exchange dealer is asking the client to pay in local currency exchange foreign currency.

- Is the rate at which foreign currency can be purchased from the dealer.

2nd Bid Price:
- Is the rate at which a dealer is willing to buy foreign currency in exchange for domestic currency.

- Is the rate at which a dealer is willing to pay in local currency in exchange for foreign currency and they are willing to pay for buying it.

- Normally, requested direct cost is greater than the direct cost of supply and the difference between these two is known as bid-ask spread.

- The offer spread is usually stated as a percentage of the cost of transacting foreign exchange market and can be calculated as follows:

-% Spread = Ask price-price offer

Ask price