imported>Doug Williamson |
imported>Doug Williamson |
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| ''Foreign exchange'' | | 1. ''Law - international law - sovereignty - personality.'' |
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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 />
| | Very similar to a country. |
| This means that the amount of foreign currency is <u>multiplied</u> by the given exchange rate, to obtain the domestic currency equivalent.
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| | But, more strictly, an entity that has: |
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| <b>Example 1</b><br />
| | *A permanent population; |
| Our domestic currency is USD.<br />
| | *A defined territory; and |
| The exchange rate with EUR is quoted as:<br />
| | *An effective government. |
| EUR/USD 1.0986
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| From the perspective of USD, this is a direct quote.<br />
| | States have separate legal personality in international law, and can enter into relations with other states. |
| It means EUR 1 = 1.0986 USD.
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| As a USD-domiciled person, we multiply by the quoted rate of 1.0986, to work out our domestic currency (USD) equivalent.
| | 2. ''Adjective.'' |
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| | Relating to, or provided by, a government or governmental agency. |
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| Say we need to exchange EUR 100,000.
| | For example, ''state aid''. |
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| EUR 100,000 would be exchanged for:<br />
| | ==See also== |
| USD 100,000 x 1.0986<br />
| | *[[International law]] |
| = USD 109,860.
| | * [[Jurisdiction]] |
| | *[[Legal personality]] |
| | *[[Member state]] |
| | *[[Rentier state]] |
| | *[[Sovereignty]] |
| | *[[State aid]] |
| | *[[State immunity]] |
| | *[[State Pension]] |
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| | | [[Category:Accounting,_tax_and_regulation]] |
| <b>Direct or indirect</b><br />
| | [[Category:The_business_context]] |
| Whether any given FX quotation is 'direct' or 'indirect' depends on our perspective. <br />
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| It depends what our domestic currency is.
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| <b>Example 2</b><br />
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| From the perspective of a EUR-domiciled person, the quote:
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| EUR/USD 1.0986
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| is an indirect quote.
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| It means EUR 1 = 1.0986 USD.<br />
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| A EUR-domiciled person would divide by this rate, in order to obtain their domestic currency (EUR) equivalent of a USD amount.
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| For example:<br />
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| USD 109,860 / 1.0986<br />
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| = EUR 100,000
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| <b>Example 3</b><br />
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| In this example we are a GBP-domiciled person.<br />
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| From our perspective, the rate with USD quoted as:
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| USD/GBP 0.6539
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| is a direct quote.
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| It means USD 1 = 0.6539 GBP.
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| 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.
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| For example:<br />
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| USD 100,000 x 0.6539<br />
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| = GBP 65,390
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| == See also ==
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| *[[Base currency]]
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| *[[Fixed currency]]
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| *[[Foreign exchange rate]]
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| *[[Indirect quote]]
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| *[[Quoted currency]]
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| *[[USD]]
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| *[[Variable currency]]
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| == Other resources ==
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| [[Media:June_16_TT_Base_jumper.pdf| Base jumper - applying direct and indirect exchange rate quotes, The Treasurer]]
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| [[Category:Manage_risks]]
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| [[Category:Trade_finance]] | |
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
