Foreign exchange rates - pricing approach
There are two foreign exchange rates, price methods: Exchange rate
1. direct quotation (Direet Quotation) (refer to "meet the price tag Act"), also known as the price quotation refers to a certain unit (1,100,1000, etc.) of foreign currency as the standard, to calculate the equivalent number of units of national currency. Is equivalent to the calculation of the deal to buy a certain number of units of foreign currency local currency, so they are called to cope with price method. The world, including China, the majority of countries are currently using direct quotation. In the international foreign exchange market, the Japanese yen, Swiss franc, Canadian dollar, are the direct pricing method, such as 119.05 yen ¥ 119.05 against the dollar.
Under the law in a direct price, if a certain unit of foreign currency equivalent to the amount of local currency is more than the early, then foreign currency rise or decline in the value of this currency, called the foreign exchange rate; the other hand, if the word less than the original currency that can be converted to the same the amount of foreign currency, foreign currency This shows a decrease or increase in value of the currency, called the foreign exchange rate fell, that is, the value of foreign currency exchange rate is proportional to the Change.
2, indirect quotation (IndireetQuotation) (refer to "accounts receivable denominated Act"), also known as accounts receivable denominated indirect quotation method. It is based on a certain units (such as a unit) of the domestic currency as the standard, to calculate the number of units of foreign currency receivables. In the international foreign exchange markets, the euro, British pound, Australian dollar and so are the indirect quotation. Such as the euro 0.9705 that a euro 0.9705 U.S. dollars.
In the indirect price law, the amount of the national currency remained unchanged, the amount of foreign currency and domestic currency's value compared with the changes in movement. , If a certain amount of local currency to foreign currency exchange amount less than the previous, which indicates that increased foreign currency, the currency value decline, the rise in foreign currency exchange rates; other hand, if a certain amount of local currency to foreign currency exchange amount over the previous period, then decline in foreign currency , the currency value rise, foreign exchange rates fall, that is, the value of foreign currency and exchange rates rise or fall in inverse proportion. Foreign exchange markets generally offer two-way prices, that offer their own party at the same time reported that the bid and offer prices, the sale by the client to decide the direction. Bid and offer prices of the spread the smaller the mean cost for smaller investors. Inter-bank transactions in the normal pricing point of difference for the 2-3 point, banks (or dealer) to the customer's offer spread varies according to Gejia bigger offer margin trading in foreign countries, basically in the 3-5 point spread, Hong Kong 6 -- 8:00, the domestic banks to trading in the 10-40 point range. In the gold standard, the exchange rate decision was based on the gold points (Golel Point), under the conditions of the notes in circulation, its decision is based on purchasing power parity (Purchase Powerpar)
3, direct and indirect quotation price The direct and indirect price price law expressed the opposite meaning of the ebb and flow rate, so in reference to a currency's exchange rate and description of its exchange rate when the level of Change, what pricing method adopted must be clear to avoid confusion.
4, New York, also known as dollar-denominated price France France France also known as the New York dollar-denominated price law is that in New York, the international financial markets, in addition to sterling by direct quotation, the pairs of other foreign currencies the price of using the indirect method of quotation. U.S. dollar-denominated France by the United States in September 1, 1978 to develop and implement the current international financial market price prevailing in France .
Must be made clear is that foreign exchange transactions with the development of globalization, the traditional pricing method for a national direct and indirect price method has been very difficult to meet the needs of the development of international exchange, we must need a unified exchange rate expression. Thus, there A major international currencies or key money (KeyCurrency) as the standard price approach. Present. Countries in the foreign exchange market are U.S. dollar exchange rates published by the standard. Other than the U.S. dollar exchange rate between two currencies must pass their own currencies against the dollar for sets of operators obtained. This pricing method is called "dollar-denominated Act."
Foreign Exchange Rate ==>
Classification of Foreign Exchange Rate ==>
