Forex Quotes

By: EconomyWatch   Date: 28 July 2009

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Forex quotes represent the value of a currency in relation to the other currency in a currency pair. Thus, if you are trying to determine the exchange rate of the US dollar and the Japanese yen (USD/JPY), the forex quote could look something like this:

USD/JPY = 93.52.

This quote means that you can buy US$1 for 93.52 JPY or vise versa. In this quote, USD is the base currency and JPY is the quoted currency.

Forex Quotes: Types

 

There are two ways in which forex quotes can be stated:

  • Direct forex quote: In a direct forex quote, the domestic currency is the base currency in the currency pair. In this form of quote, the foreign currency varies and the domestic currency remains fixed at one unit.
  • Indirect forex quote: A quote in which the domestic currency is the quoted currency is called indirect forex quote. In this form of forex quote, the foreign currency remains fixed at one unit and the domestic currency varies.

For example, if the British Pound (GBP) is your domestic currency and the US dollar is the foreign currency, the direct quote would be one that states the GBP/USD exchange rate. Meanwhile, the exchange rate that states USD/GBP would be an indirect quote.

Forex Quotes: Bid and Ask

 

While trading in the financial markets, forex quotes are often stated in the following form:

Currency Pair = Bid Price/Ask Price

  • Bid or buy price: This is the price at which an investor can readily exchange the base currency with the quote currency.
  • Ask or sell price: This is the price at which a seller is readily available for a currency pair.

The bid and ask prices for a currency pair together form a quote for that pair. The bid price of a currency pair is always lower than its ask price.

Thus, a broker could state a forex quote for USD/JPY as 93.52/54.

If an investor wishes to transact in this currency pair at that moment, he will be paying 93.54 Japanese Yens for a US dollar or selling a US dollar at the price of 93.52 Japanese Yens.

Forex Quotes: Where to Get

 

You can get forex quotes from:

·        News channels that display the latest information from the forex market.

·        Website of online brokers.

·        Websites devoted to the financial markets.


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