Direct quotation: exchange rate depreciation rate = (old exchange rate/new exchange rate-1) *100; Indirect pricing method: exchange rate depreciation rate = (new exchange rate/old exchange rate-1)* 100.
The difference between direct quotation method and indirect pricing method is as follows:
1. Definition and expression: The direct quotation is based on foreign currency, indicating the amount in domestic currency corresponding to a unit's foreign currency. Under this method, the amount of domestic currency changes with the change of exchange rate, while the amount of foreign currency remains unchanged.
2. On the contrary, the indirect pricing method is based on the domestic currency, indicating the foreign currency amount corresponding to the domestic currency of a unit. Under this method, the amount of foreign currency changes with the change of exchange rate, while the amount of domestic currency remains unchanged. Scope of application: Direct quotation is widely used in the international foreign exchange market, especially in those export-oriented economies.
3. Indirect pricing method is common in some developed countries, such as the United States, Britain and the euro zone. Judging the rise and fall of exchange rate, in direct quotation, the rise and fall of exchange rate is inversely proportional to the value of domestic currency. If the exchange rate rises, it means that the domestic currency appreciates relative to the foreign currency, that is, the value of the domestic currency increases.
On the contrary, if the exchange rate falls, it means that the domestic currency depreciates relative to the foreign currency, that is, the value of the domestic currency decreases. Under the indirect pricing method, the rise and fall of exchange rate is inversely proportional to the value of foreign currency. If the exchange rate rises, it means that foreign currency appreciates relative to domestic currency, that is, the value of foreign currency increases.
On the contrary, if the exchange rate falls, it means that the foreign currency depreciates relative to the domestic currency, that is, the value of foreign currency decreases. The impact on international trade, the use of direct quotation and indirect pricing methods will have an impact on international trade. If a country adopts direct quotation, its export price will be relatively low and its import price will be relatively high, which is beneficial to its export trade.
6. On the contrary, if a country adopts indirect pricing method, its export price will be relatively high and its import price will be relatively low, which is beneficial to its import trade. There are obvious differences between direct quotation method and indirect pricing method in definition, expression, scope of application, judgment of exchange rate fluctuation and international trade.