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Exchange rate quotes

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Exchange rate quotes

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • April 26, 2021 at 7:23 pm #618906
    Syed Ahsan Ali
    Participant
    • Topics: 111
    • Replies: 69
    • ☆☆

    Can you please explain the difference between direct & indirect quotes. And in the exam are we tested on both quotes or just one?

    Sir I have seen in your lecture that currency exchange rates are quoted as $/£ 1.2022 – 1.2028 [Foreign Currency $ FIRST then Local Currency £ in the LAST] – BUT is it always like this in the exam or it can be also given like this other way around £/$ 1.2022 – 1.2028. In this case both rate [1.2002 – 1.2028] is of £’s not $’s [true?]

    Is this exchange rates that I mentioned above was direct or indirect quote?

    April 27, 2021 at 8:28 am #618932
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    Exchange rates in the exam are given the way I explain in my lecture.

    Direct exchange rates are when the price of I unit of the foreign currency is express in terms of the home currency. An indirect exchange rate is when 1 unit of the home currency is expressed in terms of the foreign currency.

    April 27, 2021 at 12:14 pm #618972
    Syed Ahsan Ali
    Participant
    • Topics: 111
    • Replies: 69
    • ☆☆

    If UK £ is the Local Currency & US $ is the Foreign Currency then:

    If exchange rates are quoted as £/$ 1.2022 – 1.2028 [then it is Direct quote]
    If exchange rates are quoted as $/£ 1.2022 – 1.2028 [then it is Indirect quote]

    Is this correct what I wrote above about direct & indirect quotes?

    April 27, 2021 at 3:10 pm #618989
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    Correct (although obviously the figures would be different when quoted direct as opposed to when quoted indirect).

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