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Fundamentals of Financial Management, Third Edition by Vyuptakesh Sharan

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25.2 EXCHANGE RATE QUOTATION

25.2.1 Direct and Indirect Quote

Exchange rates are quoted either directly or indirectly. A direct quote gives the home- currency price of a certain quantity of a foreign currency, usually one unit or 100 units. If India quotes the exchange rate between the rupee and the US dollar in a direct way, the quotation will be written as Rs 40/US $. On the other hand, in indirect quoting, the value of one unit of the home currency is presented in terms of the foreign currency. If India adopts an indirect quote, the banks in India will quote the exchange rate as US $0.025/Re

25.2.2 Buying and Selling Rate

Normally, two rates are published—one being the buying rate and the other being the selling rate. The buying rate is also ...

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