FX Quotes and Terms Workout
- 01:32
Learn more about FX definitions and quote methodologies
Transcript
Right. Let's do a couple of FX examples. In Workout A, we're simply being asked, the quote in the market is 110.427 USD Japanese Yen. What is the base currency and what is the quoted currency? Well, the base currency is the currency on the left. So that means it's the US dollar, and that is the currency of which we have one. So we have one US dollar. That means the quoted currency is the Japanese Yen, JPY. So this quote means that in order to buy one US dollar, we'd have to pay 110.427 Japanese yen. Let's do another quick workout here while we're at it. We're being asked here, the quote in the market is 1.12525 Euro US dollar. Sharon has a hundred thousand euros that she wants to sell and receive dollars. How many US dollars can she purchase? Well, she has a hundred thousand Euros, and the exchange rate is 1.12525. What does that mean? Well, the euro is the base rate, so it's what we have one of. So we're gonna have more US dollars. So plug in the exchange rate as as it's written, and multiply the number of Euros by the exchange rate and we'll see that Sharon will get $112,525.