We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Direct Quote?

By Caitlin Kenney
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A direct quote, also called a price quotation (although a price quotation is also used to refer to other things), is a foreign exchange rate quoted as home currency per foreign currency. A foreign exchange rate expresses one country’s currency, or money, in terms of another country’s currency and is usually quoted to between 4 and 6 decimal places. For example, France uses the euro (EUR), and suppose the EUR stated as a unit, were worth half of the U.S. Dollar (USD). In the U.S., a direct quote for France would be 0.5 dollars per 1 euro. In France, or any country that uses the euro as its currency, a direct quote for the U.S. would be 2 euros per 1 dollar. This also means if a person from France wanted to exchange 500 EUR for USD, he would get 250 dollars back. If a person from the U.S. traded 500 USD for EUR, he would get 1,000 euros back.

Most countries, including the United States, use a direct quote when expressing foreign exchange rates. Other countries, however, use indirect quotes, including Australia, New Zealand, and the Eurozone, or the group of European countries using the euro as currency. Indirect quotes put the exchange rate in terms of foreign currency per domestic currency. So, using the hypothetical situation above, an indirect quote in France for the United States would be 0.5 dollars per 1 euro.

When thinking about exchange rates, it’s helpful to think of the rate as a fraction. For a direct quote, this would mean putting the base currency on bottom and putting the term currency on top. The base currency, or unit currency, is the currency made to equal 1 and the term currency, or price currency, is the currency being compared with the base currency. In the hypothetical situation, the fraction would look like this for a direct quote from the United States to France: 0.5 USD/EUR.

This is not, however, how it is properly written. The abbreviation for the base currency goes directly before the abbreviation for the term currency. To use the same example, to write a direct quote for the exchange rate in the United States for France, one would write that the EURUSD is 0.5. The order of the fraction is reversed. Whether writing a direct or an indirect quote, the base currency comes first and the term currency comes second.

When expressing a direct quote, the exchange rate has an inverse relationship with the value of the home currency. This shows more clearly when looking at the equation used to find the direct quote of an exchange rate:

Exchange rate = domestic currency / foreign currency.

Assuming the foreign currency stays constant, if the value of domestic money, which is also the term currency, goes up, or appreciates, the exchange rate will go down. If the value of the home currency goes down, the exchange rate will go up. Alternatively, if the base currency goes up and the home currency stays constant, the exchange rate will go up, and if the foreign currency goes down, the exchange rate goes down.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.