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Exchange rate pricing methods mainly include direct quotation method, indirect pricing method, dollar pricing method and cross exchange rate method.
Direct quotation is based on foreign currency, and how much local currency should be converted is calculated (1 foreign currency =X local currency).
In the case of direct quotation, the decline of foreign exchange rate means that the amount of foreign currency converted into domestic currency is reduced, indicating that domestic currency is appreciating and foreign currency is depreciating. The rise is the depreciation of local currency and the appreciation of foreign currency. ?
The indirect pricing method is to calculate how much foreign currency should be converted according to the domestic currency (1 unit functional currency =X unit functional currency).
Indirect pricing method is different from direct quotation, and the foreign exchange rate has fallen, indicating that the foreign currency converted from domestic currency has increased, domestic currency is appreciating and foreign currency is depreciating. The rise is the depreciation of local currency and the appreciation of foreign currency.
The US dollar pricing method is to calculate how many other currencies should be exchanged according to US dollars (1 US dollar =X foreign currency). With the rapid increase of foreign exchange trading volume in the international financial market, in order to facilitate price comparison and trading, bank quotations often use the dollar price method.
Cross exchange rate is because foreign exchange transactions often involve two non-US dollar currencies, and the quotations in international financial markets are mostly US dollars against another currency. Therefore, the exchange rate of one non-US dollar currency to another non-US dollar currency often needs to be calculated with these two currencies, and this calculated exchange rate is called cross exchange rate.