What is Direct and Indirect Quote in Foreign Exchange Market

A spot exchange rate is one at which currency can be sold or bought for immediate delivery which two business day after the transaction. In spot exchange market the quote for a currency may be direct or indirect. Let’s look what direct and indirect quote implies in foreign exchange market.

Direct Quote – It refers to the number of units of domestic currency which is required to buy one unit of foreign currency. So if direct quote for rupee/$ is 45/1 then it implies that for buying 1 dollar you have to pay 45 rupees.

Indirect Quote – It refers to the number of units of foreign currency required to buy 1 unit of domestic currency. So if indirect quote for $/rupee is .25$ then it implies that for buying 1 rupee one has to pay .25$. Indirect quote is an inverse of direct quote so if one knows direct quote one can easily calculate indirect quote for a currency.

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