Direct quote and State: Difference between pages

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A 'direct' quote is a foreign exchange rate quotation where fixed amounts of the foreign currency are expressed as variable amounts of the domestic currency.<br />
1. ''Law - international law - sovereignty - personality.''
This means that the amount of foreign currency is <u>multiplied</u> by the given exchange rate, to obtain the domestic currency equivalent.


Very similar to a country.


<b>Example 1</b><br />
But, more strictly, an entity that has:
Our domestic currency is USD.<br />
The exchange rate with EUR is quoted as:<br />
EUR/USD 1.0986


*A permanent population;
*A defined territory; and
*An effective government.


From the perspective of USD, this is a direct quote.<br />
It means EUR 1 = 1.0986 USD.


States have separate legal personality in international law, and can enter into relations with other states.


As a USD-domiciled person, we multiply by the quoted rate of 1.0986, to work out our domestic currency (USD) equivalent.


2. ''Adjective.''


Say we need to exchange EUR 100,000.
Relating to, or provided by, a government or governmental agency.


For example, ''state aid''.


EUR 100,000 would be exchanged for:<br />
USD 100,000 x 1.0986<br />
= USD 109,860.


==See also==
*[[International law]]
* [[Jurisdiction]]
*[[Legal personality]]
*[[Member state]]
*[[Rentier state]]
*[[Sovereignty]]
*[[State aid]]
*[[State immunity]]
*[[State Pension]]


<b>Direct or indirect</b><br />
[[Category:Accounting,_tax_and_regulation]]
Whether any given FX quotation is 'direct' or 'indirect' depends on our perspective. <br />
[[Category:The_business_context]]
It depends what our domestic currency is.
 
 
<b>Example 2</b><br />
From the perspective of a EUR-domiciled person, the quote:
 
 
EUR/USD 1.0986
 
 
is an indirect quote.
 
 
It means EUR 1 = 1.0986 USD.<br />
A EUR-domiciled person would divide by this rate, in order to obtain their domestic currency (EUR) equivalent of a USD amount.
 
 
For example:<br />
USD 109,860 / 1.0986<br />
= EUR 100,000
 
 
<b>Example 3</b><br />
In this example we are a GBP-domiciled person.<br />
From our perspective, the rate with USD quoted as:
 
 
USD/GBP 0.6539
 
 
is a direct quote.
 
 
It means USD 1 = 0.6539 GBP.
 
 
As a GBP-domiciled person, we would <u>multiply</u> by this rate to work out our domestic currency (GBP) equivalent of a USD amount.
 
 
For example:<br />
USD 100,000 x 0.6539<br />
= GBP 65,390
 
 
== See also ==
*[[Base currency]]
*[[Fixed currency]]
*[[Foreign exchange rate]]
*[[Indirect quote]]
*[[Quoted currency]]
*[[USD]]
*[[Variable currency]]
 
 
== Other resources ==
[[Media:June_16_TT_Base_jumper.pdf| Base jumper - applying direct and indirect exchange rate quotes, The Treasurer]]
 
[[Category:Manage_risks]]
[[Category:Trade_finance]]

Revision as of 18:36, 1 November 2021

1. Law - international law - sovereignty - personality.

Very similar to a country.

But, more strictly, an entity that has:

  • A permanent population;
  • A defined territory; and
  • An effective government.


States have separate legal personality in international law, and can enter into relations with other states.


2. Adjective.

Relating to, or provided by, a government or governmental agency.

For example, state aid.


See also