A direct quote is a foreign exchange rate quoted as the domestic currency per unit of the foreign currency. In other words, it involves a quote in fixed units of foreign currency against variable amounts of the domestic currency. As of June , a direct quote of the U. Non-business publications and other media usually quote foreign exchange rates in direct terms for the ease of consumers.
However, the foreign exchange market has quoting conventions that transcend local borders. In the context of trading rooms and professional publications, most currencies are quoted as the number of foreign currency units per dollar.
This means that the dollar serves as the base currency, whether the speaker is in the United States or elsewhere. A major exception to the rule that quotes are dollar-based is that the British pound is the base whenever it's quoted against other currencies, including the dollar but with the exception of the euro. This reflects the fact that the pound was the world's dominant currency in the years leading up to World War II and before the ascendancy of the U.
The euro came into existence on Jan. The euro replaced many major traded European currencies including the German mark, the French franc and the Dutch guilder. The European Central Bank, which oversaw the conversion, intended the currency to be the financial market's dominant currency.
For this reason, it specified that the euro should always be the base currency whenever it is traded, including against both the U. Dictionary Term Of The Day. A conflict of interest inherent in any relationship where one party is expected to Broker Reviews Find the best broker for your trading or investing needs See Reviews.
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