Here are some notes on the direct and indirect quote in Indian forex in detail:
- Direct quote: In a direct quote, the price of a currency is quoted in terms of another currency. For example, the price of the US dollar in Indian rupees would be quoted as INR/USD.
- Indirect quote: In an indirect quote, the price of a currency is quoted in terms of its own currency. For example, the price of the Indian rupee in US dollars would be quoted as USD/INR.
In the Indian forex market, the direct quote is the most commonly used quote. This is because the Indian rupee is the domestic currency, and it is more common to quote the price of other currencies in terms of the Indian rupee.
The indirect quote is sometimes used when trading currencies that are not as commonly traded as the Indian rupee. For example, the indirect quote might be used to trade the Japanese yen in US dollars.
Here are some additional things to keep in mind about direct and indirect quotes in Indian forex:
- The direct quote is the more intuitive quote. This is because it is easier to understand how much a currency is worth in terms of another currency.
- The indirect quote is sometimes used to make the price of a currency look lower. This is because the indirect quote shows the number of units of the domestic currency that you need to buy one unit of the foreign currency. For example, if the indirect quote for the USD/INR is 75, this means that you need 75 Indian rupees to buy one US dollar. However, if you use the direct quote, you would see that the price of the US dollar in Indian rupees is 1.33.