Home The difference between the direct and indirect method of foreign exchange marking

# The difference between the direct and indirect method of foreign exchange marking

direct marking cashbackforexpipcalculator, to a certain unit of cashbackforexprofitcalculator cashbackforexcalculatorOnline as a benchmark (such as 1,100, etc.), converted into a certain amount of domestic currency China, Japan, Canada cashback forex most other countries use the direct marking method to Chinas foreign exchange rate for example: At present, the Bank of Chinas foreign exchange rate: the foreign exchange rate of the dollar cashback forex calculator Online 672.08, which represents 100 USD = 672.08 yuan indirect indirect method and the opposite of the direct method, he refers to a certain unit of national currency as the benchmark (such as 1,100, etc.), will be converted into a certain amount of foreign currency United States, the United Kingdom, the eurozone and so on is the use of indirect method to the United States, for example, the current United States shows the RMB exchange rate is generally about 0.14, on behalf of: 1 RMB = 0.14 U.S. dollars. Generally speaking, the indirect method illustrates the strength of its national currency because the indirect method is based on its own national currency, while most countries in the market currently use the direct method, because it is based on a certain amount of foreign currency, which is also equivalent to its peg Our exchange rate is mainly pegged to the U.S. dollar, but is currently joining other currencies, slowly changing the ratio in the foreign exchange market When doing foreign exchange trading, we will encounter many currency pairs, the main straight plate is USD/CAD, GBP/USD, USD/JPY, EUR/USD, etc. Why is it not CAD/USD, USD/GBP, JPY/USD? Because the Canadian dollar and the Japanese yen are by default direct markups, while the British pound and the euro are indirect markups (understandably: direct markups are based on a certain unit of the U.S. dollar, so the U.S. dollar is in the denominator position). The direct and indirect markups are convertible, and they are calculated as reciprocal relationships or take the RMB and USD as an example with 1 as the basic unit. In the middle, you can also realize the arbitrage mechanism of exchange rate swaps. The direct and indirect markup method does not have much impact on the currency itself, only the markup method is different, so in life we just need to understand it, it helps to understand the foreign exchange rates