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Direct quote

A rate that prices one unit of foreign currency in units of the domestic currency, such as 1.36 Canadian dollars per US dollar to someone in Canada.

Whether a quote is direct or indirect depends on where you stand. A direct quote puts the home currency in the quote slot: for a Canadian, USD/CAD at 1.3620 is direct, because it prices a foreign unit in domestic money.

The distinction survives from a time when banks quoted retail customers in local terms. It still shows up in textbooks, import and export contracts, and central bank publications, so it helps to recognise it.

In a direct quote, a rising number means the home currency is getting weaker, because each foreign unit costs more of it.

Example: a Canadian importer sees USD/CAD go from 1.3500 to 1.3800. A USD 200,000 invoice that would have cost CAD 270,000 now costs CAD 276,000, an extra CAD 6,000 for the same goods.

Related: indirect-quote, currency-pair-notation, quote-currency, depreciation

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