(1) Direct quotation
The direct quotation method, also known as the price payable method, is to calculate how many units should be paid in the local currency based on a certain unit of foreign currency (1, 100, 10000,10000). It is equivalent to calculating how much local currency should be paid for purchasing a unit of foreign currency, so it is called the payable price method. Most countries in the world, including China, currently adopt direct quotation. In the international foreign exchange market, Japanese yen, Swiss franc and Canadian dollar are all quoted directly, such as Japanese yen 1 19.05, that is, one dollar against 1 19.05 yen.
Under the direct quotation, if a unit's foreign currency conversion cost currency is more than the previous period, it means that the foreign currency value rises or the local currency value falls, which is called the foreign exchange rate rise; On the other hand, if you want to use less local currency than before, you can convert it into the same amount of foreign currency, that is to say, the decline of foreign currency value or the increase of local currency value is called the decline of foreign exchange rate, that is, the value of foreign currency is directly proportional to the rise and fall of exchange rate.
(2) indirect pricing method
Indirect pricing method is also called accounts receivable pricing method. It calculates the foreign currency receivable of several units in the domestic currency of a unit (such as 1 unit). In the international foreign exchange market, euro, pound and Australian dollar are all indirectly priced. For example, the euro is 0.9705, which means that 1 euro is 0.9705 USD.
In the indirect pricing method, the local currency amount remains unchanged, and the foreign currency amount changes with the relative change of the local currency value. If a certain amount of local currency can be converted into less foreign currency than the previous period, it means that the value of foreign currency rises and the value of local currency falls, that is, the foreign exchange rate falls; On the other hand, if a certain amount of local currency can be converted into more foreign currency than in the previous period, it means that the value of foreign currency declines and the value of local currency rises, that is, the foreign exchange rate rises, that is, the value of foreign currency is inversely proportional to the rise and fall of exchange rate.
The quotation in the foreign exchange market is generally a two-way quotation, that is, the quotation party quotes its own buying price and selling price at the same time, and the customer decides the buying and selling direction by himself. The smaller the difference between the buying price and the selling price, the smaller the cost for investors. The quotation spread of inter-bank transactions is normally 2-3 points, and the quotation spread of banks (or dealers) to customers varies greatly according to various situations. At present, the quotation spread of foreign margin trading is basically 3-5 points, 6-8 points in Hong Kong and 10-40 points in domestic banks.