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Exchange rates

11 May, 2016 - 11:43

The price of one country’s currency in units of another country’s currency is known as a foreign currency exchange rate. Exchange rates can be quoted in two ways. One way, known as a direct quote, is to state the number of domestic units of currency per one unit of foreign currency. If an exchange rate is an indirect quote, the exchange rate is stated as the number of foreign units per one unit of domestic currency (Beenhakker, 2001).

For a US company trading US dollars ($) for Swiss Francs (CHF)

Table 14.2 Indirect quote example

Direct Quote


Indirect Quote