Trade · 6 pages · 12 min

Why the same exchange rate can be written two ways

An exchange rate and its reciprocal are one price, counted from the other currency's side.

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From the opening

If one dollar buys a certain number of another currency, then one unit of that other currency buys the reciprocal number of dollars. Both sentences state the same relation, written from opposite ends. The opening covers one rate, two directions, reciprocals multiply to about one, and a large number is not strength.

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Inside

One rate, two directions
Reciprocals multiply to about one
A large number is not strength
Bid and offer are not inverses
Where the idea stops applying
A distinction worth keeping

Sources

Reciprocal exchange rate quotes
Currency quotation conventions

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Why the same exchange rate can be written two ways

From the opening

Inside

Sources

Also on the desk