A forward rate is a rate applicable to a financial transaction that will take place in the future.

The Bid rate is the rate at which you can sell. The Ask (or offer) rate is the rate at which you can buy. Bid/Ask Spread The difference between the bid and ask prices. In thinly traded markets, this spread may be wide. The mean is the average of bid and ask rate. The cash rate is the exchange rate used in cash transaction.
THE BASICS OF CURRENCY TRADING

Multiple exchange rates The system by which a country's currency has more than one exchange rate with any foreign currency. The rate which applies to any transaction may depend on the holder of the currency, or on the purpose for which it is being used.
THE BASICS OF CURRENCY TRADING


THE BASICS OF CURRENCY TRADING If a currency is free-floating, its exchange rate is allowed to vary

against that of other currencies and is determined by the market forces of supply and demand. A movable or adjustable peg system is a system of fixed exchange rates, but with a provision for the devaluation of a currency. For example, between 1994 and 2005, the Chinese yuan renminbi(RMB) was pegged to the United States dollar at RMB 8.2768 to $1. China was not the only country to do this; from the end of World War II until 1966, Western European countries all maintained fixed exchange rates with the US dollar based on the Bretton Woods system.
Chapter 3 The Foreign Exchange Market
The Foreign Exchange Market
The
basics of currency trading
and supply for foreign exchange rate system
Demand
Exchange Arbitrage
A medium of exchange are usually needed for
payments across national borders.
Exchange rates are important because they enable us
to translate different countries’ prices into comparable terms.
THE BASICS OF CURRENCY TRADING
Foreign Exchange - It refers to assets denominated in the currency of another nation or group of nations. - It can be cash, funds available on credit cards and debit cards, traveller’s checks, bank deposits etc.

The euro, pound, the Australian dollar are the indirect quotation method

THE BASICS OF CURRENCY TRADING
Direct Quote = 1/ Indirect Quote =1/ 9.5586 = 0.1046
THE BASICS OF CURRENCY TRADING
THE BASICS OF CURRENCY TRADING Appreciation and Depreciation of a Currency(RMB versus
RUB）
A depreciation of the RMB against the RUB means

Indirect Quote =1/Direct Quote =1/ 0.1046 = 9.5586

THE BASICS OF CURRENCY TRADING


From China’s point view Quotes using a country's home currency as the price currency (e.g. RUB 1.00 = RMB 0.1) are known as direct quotation or price quotation and are used by most countries. Quotes using a country's home currency as the unit currency (e.g. RUB 9.5 = RMB 1.00) are known as indirect quotation or quantity quotation and are used in British newspapers and are also common in Australia, New Zealand and the eurozone.
How many units of national currency do we need to buy a unit
of foreign currency RMB VS RUB From China’s point view, 0.1046 RMB=1 RUB The yen, Swiss franc, Canadian dollar, RMB etc are all direct price method

THE BASICS OF CURRENCY TRADING
Indirect quote is the reporting of foreign exchange rate in terms of units of foreign currency per unit of domestic currency. How many units of foreign currency do we need to buy a unit of national currency RMB VS RUB From China’s point view, 1 RMB=9.5586RUB
trading different nations’ moneys.
holding of foreign currencies. assets that denominated in foreign currencies and can be used
to pay off foreign debts.
THE BASICS OF CURRENCY TRADING How many kinds of exchange rate are there?
Spot exchange rate and forward exchange rate Bid rate , ask rate , mean rate and cash rate Fixed rate and floating rate Single rate and multiple rates Nominal rate and real rate
that the price of a RUB in terms of RMB has gone up.
An appreciation of the RMB against the RUB means
that the price of a RUB in terms of RMB has gone down.
direct quotation: 1 foreign currency unit = x home currency
units indirect quotation: 1 home currency unit = x foreign currency units
THE BASICS OF CURRENCY TRADING
THE BASICS OF CURRENCY TRADING
A direct quote is a foreign exchange rate quoted as the