115 CFA
File: Economics - Reading 18 - 2. Exchange Rate Quotations

2. Exchange Rate Quotations

c. calculate and interpret the percentage change in a currency relative to another currency;

What is direct quotation vs indirect quotation?
- A direct exchange rate quote gives the home (domestic) currency price of a certain quantity of the foreign currency quoted: Domestic Currency/Foreign Currency, or DF/FC
- An indirect quotation is the opposite of a direct quote. E.g. FC/DF

What is a bid-ask spread?
- The bid-ask spread is the spread between bid and ask rates for a currency: Bid-ask spread = ask price - bid price. It is usually stated as a percentage of the ask price:
- $$\%\ spread = \frac{ask\ price - bid\ price}{ask\ price} \times 100$$

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