CURRENCY CONVERTING
In finance, the exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other.
There are quite a few forex indicators. For instance
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| Exchange Rates
For example an exchange rate of 120 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 120 is worth the same as USD 1.
The foreign exchange market is one of the largest markets in the world. By some estimates, about 2 trillion USD worth of currency changes hands every day.
The spot exchange rate refers to the current exchange rate.
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The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.
An exchange rate quotation is given by stating the number of units of a price currency that can be bought in terms of 1 unit currency (also called base currency). For example, in a quotation that says the EUR/USD exchange rate is 1.2 (USD per EUR), the price currency is USD and the unit currency is EUR.
Quotes using a country's home currency as the price currency (e.g., £0.574744 = $1 in the UK) are known as direct quotation or price quotation (from that country's perspective) ([1]) and are used by most countries.
Quotes using a country's home currency as the unit currency (e.g., $1.73990 = £1 in the UK) are known as indirect quotation or quantity quotation and are used in British newspapers and are also common in Australia, New Zealand and Canada.
direct quotation: 1 foreign currency unit = x home currency units
indirect quotation: 1 home currency unit = x foreign currency units
Note that, using direct quotation, if the home currency is strengthening (i.e., appreciating, or becoming more valuable) then the exchange rate number decreases. Conversely if the foreign currency is strengthening, the exchange rate number increases and the home currency is depreciating.
When looking at a currency pair such as EUR/USD, many times the first component (EUR in this case) will be called the base currency. The second is called the counter currency. For example : EUR/USD = 1.2836, means EUR is the base and USD the counter, so 1 EUR = 1.2836 USD.
Currency pair are given with four decimal places except au JPY with two decimal places (EURUSD : 1.2836 - EURJPY : 150.17). In other words, quotes are given with 5 digits. Where rates are below 1, quotes frequently include 5 decimal places.
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