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| | == Summary == |
| | | Importing files from local file repository |
| A term used in foreign exchange rate quotation.
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| '''Example'''
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| Consider the historical FX quote:
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| GBP 1 = 1.4598 - 1.4602 USD.
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| The base currency is GBP.
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| This is the currency there is a single unit of, to be exchanged for a variable number of USD.
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| The inversion of this FX quote means expressing the same price, but with the other currency as the base currency (USD here):
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| USD 1 = (1 / 1.4602) - (1 / 1.4598) GBP
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| USD 1 = 0.6848 - 0.6850 GBP.
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| In the inverted FX quote, USD is the currency there is a single unit of (to be exchanged for a variable number of GBP).
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| The term FX ''inverse quote'' is also used to refer to an FX inversion.
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| 2.
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| In any market, the reversal of a normal - or commonly expected - relationship.
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| 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).
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| == See also == | |
| * [[Base currency]]
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| * [[Foreign exchange]] (FX)
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| * [[Inverse yield curve]]
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| * [[Reciprocal]]
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| * [[Tax inversion]]
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| [[Category:Manage_risks]]
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Latest revision as of 09:28, 27 July 2023
Summary
Importing files from local file repository
