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I think the easy way to remember is to think that we will always be at loss. So we choose the rate which costs us more or gives us less.. Is this okay?
That’s fine. As long as you can get the correct rate to use quickly, then whatever way is easiest for you
Sorry I forgot to add that usually all currencies are quoted against USD except the “Queen’s curriencies” i.e. GBP, AUSD, NZD etc. and also the Euro that are quoted as base currencies therefore instead of $/£ (as shown in the example) we would have GBPUSD (£/$) pair – therefore it would correctly be 1.6 USD for every 1 GBP.
I think. But I could be wrong.
Which way round currencies are quoted differs between countries, and also between channels (e.g. the way the bank quotes is not necessarily the same way round as the way TV channels quote).
What is in the lecture is correct for the exam!
See my other answer below.
I agree. Many thanks.
I’ve read everywhere else that the currency quotes are always: 1 of base currency (i.e. $ in this case) to however much of the counter currency (i.e £1.6 in the above example). Here the lecturer says it is the other way around.
Forgive me but am I missing something?
The lecture makes it clear and is correct.
In practice there are always 2 ways of quoting exchange rates – there is no ‘official’ way of quoting them (even though most quote against their own currency.
However in the exam, if it is (for example) a $/£ quote, then it is giving the number of $’s that equal 1 £
Similarly if it is a EUR/$ quote, then it is giving the number of EUR that equal 1 $
I am only concerned about helping people to pass the exam, and in the exam the quotes are always as above (and as per the lecture) unless, obviously, you are told different.
Many thanks Mr Moffat. It can get confusing at times (at least for me, it does), but your explanations are very clear, as always. I’ll stick with your method. Cheers!
I agree that it is confusing (and thank you for the comments)
this video might just do the trick to finally understand foreign exchange
thank you for the lecture, so easy to understand and to apply the knowledge
Awesome, I now totally understand it. I used to mix up the buying and selling rates between the bank and customer. It has been ironed out. Thanks O.T
Wowww Thank you so much for your work!!
Really nice. definitely got it now.
This is a great lecture. I am now very much clear about the concept of buyinh and selling rates and how to use them…
Thanks for the tips. It is clearer now. Great Lecture
Now the home,base and cross currency that I have learnt is much clearer. Until this I couldn’t get it right. Thanks
You really only get the beauty of this presentation when you have had to reverse engineer how some of the text books present this…
These letures on Chapter 17 are great! I watched all of them and they helped me enormously, so a HUGE thank you to Open Tuition!!!
You have ironed out the common errors that I have been making when converting the currencies.
Wow! What can I say? I just love it.
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