Exchange rate quotations may be either direct or indirect. The difference depends on identifying one currency as a local currency and the other as a foreign currency.

Question

Quizplus · Accepted Answer

Direct exchange rates quote the exchange rate of the local currency in terms of the foreign currency, while indirect exchange rates quote the exchange rate of the foreign currency in terms of the local currency. The choice of which currency is considered local and which is considered foreign depends on the perspective of the currency trader or market being analyzed.

Exchange Rate Quotations May Be Either Direct or Indirect