Direct quotation is expressed in terms of how much local currency the unit foreign currency is converted into, for example, 1 USD =6.9838 RMB. For this exchange rate pricing method, the rise of the exchange rate means the depreciation of the local currency.
The indirect pricing method is expressed by how much foreign currency the unit's local currency is converted into, for example, 1 RMB =0. 1432 USD. For indirect pricing method, the rise of exchange rate means the appreciation of local currency.
Foreign exchange cash is tangible foreign banknotes and coins. When customers want to transfer cash abroad, they can bring cash or remit money. However, when customers take "remittance", because cash is in kind, the bank must transport it abroad, and the transportation expenses will be borne by the customers, which is manifested as "selling cash to buy cash" (customers sell cash to buy cash). It can be seen that cash cannot be converted into cash. If cash is converted into cash, customers will suffer some losses in foreign exchange amount.
Spot foreign exchange is the foreign exchange on the books. Its transfer out of the country, without physical transfer, can be directly remitted, just a transfer on the book. When withdrawing cash, the remitter has already borne the transportation expenses, so cash can withdraw the same amount of cash.
In the foreign exchange quotations published by designated foreign exchange banks, the cash buying price is less than the cash buying price, while the cash selling price is equal. This shows that the country's foreign exchange management policy is to encourage the holding of cash and limit the holding of cash because cash is more convenient for foreign exchange management than cash.
Foreign exchange trading refers to the way of buying one currency in a pair of currency combinations and selling the other currency at the same time. The exchange rates of various currencies in the international market fluctuate frequently, and they are traded in the form of currency pairs, such as Euro/USD or USD/JPY.
The main advantage of the foreign exchange trading market lies in its high transparency. Due to the huge transaction volume, the main funds (such as government foreign exchange reserves, multinational consortium fund exchange, foreign exchange speculators fund operation, etc. ) has a very limited impact on market exchange rate changes. On the other hand, from the fundamental analysis of exchange rate fluctuations, it is usually important data released by governments (such as GDP and GNP central bank interest rates), speeches by senior government officials, or news released by international organizations (such as the European Central Bank) that can have a greater impact.
There is no specific place in the foreign exchange market, and there is no central exchange. All transactions are conducted between banks through the Internet. Any financial institution, government or individual in the world can participate in trading 24 hours a day.
The foreign exchange market runs continuously for 24 hours, rising and falling, and never stops. Its trend is like the transition between day and night on the earth, and it goes on and on. Accordingly, the market trend of exchange rate is divided into four stages: bottoming, rising, topping and falling.