In finance, a currency quote (also known as an exchange rate) is the value of one particular currency relative to another. For example, 91 Japanese yen can be exchanged for one US dollar, and this means that their quotation is 91: 1. This value is determined in the Forex market, which works 24 hours a day, excluding weekends.
Thus, speaking about what quotes are, you can define them as the ratio of one currency to another in their pair. In this case, the monetary unit that is used as a reference is called the quote currency, and the second is called the transaction currency.
Such currency pairs are sometimes recorded by concatenating ISO codes (ISO 4217), separated by a slash. The most widely traded currency pair is the ratio of the euro to the US dollar, denoted as EUR / USD. An example of what quotes are, therefore, is the EUR / USD ratio. In this example, the euro is the base currency, USD is the counter currency.
Currency quotes are generally accepted abbreviations provided by the International Organization for Standardization (known as ISO). By virtue of ISO 4217, the main monetary currencies and their values are indicated as follows - US dollar (USD), British pound (GBP), euro (EUR), Australian dollar (AUD), Japanese yen (JPY), Canadian dollar (CAD) and finally the Swiss franc (CHF).
The quote, designated EUR / USD 1.2500, indicates that one euro is exchanged for 1.2500 US dollars. If it changes, for example, from 1.2500 to 1.2510, the euro will increase its relative value. In turn, this means that the dollar has weakened, while the euro has strengthened. On the other hand, if the EUR / USD ratio changes from 1.2500 to 1.2490, then the euro becomes relatively weaker than the dollar.
Speaking of what quotes are, one should keep in mind the rules established by the European Central Bank. According to his requirements, the euro has priority in the currency pair. Thus, all couples with his participation should use it as their base, indicated at the beginning. For example, the US dollar exchange rate is defined as EUR / USD.
However, in some regions, monetary units may change places or not have an exact designation. In order to determine what is the base currency in such a pair, the unit that has an exchange rate of more than 1000 is taken as the basis. This avoids problems with rounding - exchange rates are quoted with more than 4 decimal places. There are some exceptions to this rule, for example, Japan often quotes its currency as a base for others. Speaking about what quotes are, it should be noted that displaying the value of a currency as a base is used in most countries of the world and is called a direct quote. Displaying this ratio in the reverse order is called an indirect quote and is common in Australia, New Zealand and some countries of the Eurozone. Thus, the indication USD 1.35991 = 1.00 EUR does not reflect the value of the dollar quote, but the value of the euro.
When using direct quotation, an increase in the base currency indicator indicates its strengthening and increase in the value of the quoted one. In other words, an increase in the exchange rate means an increase in the value of a particular currency unit