International Trade and Forfaiting Association and Inversion: Difference between pages
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1. | |||
A term used in foreign exchange rate quotation. | |||
The | Consider the historical FX quote of 1 GBP = USD 1.4598 - 1.4602. | ||
The base currency is GBP. | |||
The inversion of this FX quote means expressing the same price, but with the other currency as the base currency (USD here). | |||
So 1 USD = GBP [1/1.4602] - [1/1.4598] | |||
1 USD = GBP 0.6848 - 0.6850. | |||
2. | |||
In any market, the reversal of a normal - or commonly expected - relationship. | |||
For example the situation of an Inverse yield curve, where longer maturities of funds are trading at LOWER yields than shorter-dated maturities (being the opposite of the normally expected upward-sloping relationship). | |||
== See also == | |||
* [[Base currency]] | |||
* [[Foreign exchange]] | |||
* [[Inverse quote]] | |||
* [[Inverse yield curve]] | |||
Revision as of 14:19, 23 October 2012
1. A term used in foreign exchange rate quotation.
Consider the historical FX quote of 1 GBP = USD 1.4598 - 1.4602. The base currency is GBP.
The inversion of this FX quote means expressing the same price, but with the other currency as the base currency (USD here).
So 1 USD = GBP [1/1.4602] - [1/1.4598]
1 USD = GBP 0.6848 - 0.6850.
2. In any market, the reversal of a normal - or commonly expected - relationship.
For example the situation of an Inverse yield curve, where longer maturities of funds are trading at LOWER yields than shorter-dated maturities (being the opposite of the normally expected upward-sloping relationship).
See also
