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TRade Finance Forex BUY LOW SELL HIGH MAXIM by Vishal Mantri +91996560404

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The exchange rate may be quoted in two ways. Direct quotation or home currency quotation and Indirect quotation or foreign currency quotation. For instance, a fruit vendor may express the price of apples in either of the following two ways: Method I One apple costs Rs.10 Method II For Rs.100, 10 apples In both the case the value of apple or the rupee is the same though expressed differently .In method I, the price per apple is quoted in rupees. In method II, the unit of rupees kept constant at 100, and the quantity of fruits is varied to reflect their prices. The same is also true for foreign currency. In foreign exchange also the rate of exchange can be quoted in two ways: Method I USD 1= Rs.43.20 or USD 1=43.30 Method II Rs.100 = USD 2.3409 or Rs.100 = 2.3200 The quotation under Method I, in which exchange rate is expressed as the price per unit of one US dollar in terms of the home currency is known as ‘Home Currency Quotation’ or ‘Direct Quotation’. It may be noted that under direct quotation the number of units of foreign currency is kept constant and any change in the US dollar quoted at under different values of rupees. Under Method II, the unit of home currency is kept constant and the exchange rate is expressed as so many units of foreign currency for a fixed unit of home currency is known as ‘Foreign Currency Quotation’ or ‘Indirect Quotation’. Under indirect quotation, any change in exchange rate will be effected by changing the number of units of foreign currency. For instance, the rate Rs.100=USD 2, 3400 may become in due course USD 2.2450 or USD 2.3785, and so on. The indirect quotation is used in London foreign exchange market. In New York and other foreign exchange markets mostly the direct method is in vogue. In India, earlier we had used indirect method. However, from August 2, 1993, India has switched over to direct method of quotation. The change has been introduced in order to simplify and establish transparency in exchange rates in India.
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