What is the direct pricing method of exchange rate? The difference between direct exchange rate and indirect exchange rate

The exchange rate between two currencies can also be regarded as the value of one country's currency to another, and the exchange rate is a financial means for each country to achieve its political purposes. Exchange rates change because of interest rates, inflation, the politics of the country and the economy of each country. The exchange rate is determined by the foreign exchange market. What is the difference between direct exchange rate and indirect exchange rate?


What is the direct pricing method of exchange rate
The bid price method, also known as the payable price method, is based on a certain unit of foreign currency as the standard to calculate the amount of unit of domestic currency payable. It is equivalent to calculating how much local currency should be paid to purchase a certain unit of foreign currency, so it is called the payable price method. Under the direct pricing method, foreign currency is used as the base currency, and the domestic currency is used as the marked currency; the amount of the marked currency changes with the change of the value of foreign currency or domestic currency. Most countries in the world, including China, adopt the direct bidding method. In the international foreign exchange market, Japanese yen, Swiss franc, Canadian dollar, etc. are all directly quoted price method. In addition to the direct quotation method when US dollar is exchanged with euro, British pound, New Zealand dollar and other currencies, indirect quotation method is adopted in other situations, that is, how many units of foreign currency can be exchanged for a unit of U.S. dollar.

The difference between direct exchange rate and indirect exchange rate?
In the international foreign exchange market, most countries in the world, including China, currently adopt the direct pricing method. For example, under the direct pricing method, if the amount of domestic currency converted by a certain unit of foreign currency is more than that in the previous period, it means that the value of foreign currency increases or the value of local currency falls, which is called the rise of foreign exchange rate, If you want to use less local currency than the original one, you can exchange the same amount of foreign currency, which means that the value of foreign currency falls or the value of local currency rises. That is, the value of foreign currency is directly proportional to the rise and fall of exchange rate, And the unit is constant.

The above is the difference between direct exchange rate and indirect exchange rate, the introduction of direct pricing method of exchange rate, hoping to help you.

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