How to read quoted foreign exchange rates (Part one: Direct and Indirect quotes) – ACCA AFM

My name is Steve Chen, a fellow member of ACCA and course director at APC ( teaching ACCA online courses to students from all around the world. This article will explain the topic ‘Quoted Foreign Exchange Rates’ in ACCA Advanced Financial Management (AFM) exam.

The quoted foreign exchange rates topic is divided into two articles, and this is article one.

There are usually different quotes for foreign exchange rates for different currencies. These include indirect and direct quotes.

  • Indirect quote is where one domestic currency could be exchanged into a variable amount of foreign currencies.

  • Direct quote is where one foreign currency could be exchanged into a variable amount of domestic currencies.

Higher value currencies such as UK pounds and US dollar usually use indirect quote where lower value currencies usually use direct quote.

For example, USD/RMB 6.840:

  • To the USD, this is the indirect quote as one domestic currency (USD) could be exchanged into variable amount of foreign currencies (RMB 6.840).

  • To the RMB, this is the direct quote as one foreign currency (USD) could be exchanged into variable amount of domestic currencies (RMB 6.840).

I hope I have simplified the quoted foreign exchange rates in this article. In the next article, I will explain how to read quoted foreign exchange rates in bid and offer prices.

I teach ACCA Financial Management and Advanced Financial Management papers for quite a few years, and one of my ACCA students Martin Valent who studied ACCA AFM with me (join my online course at became the first prize winner in March 2017 ACCA P4 Advanced Financial Management exam in Slovakia. I am passionate about teaching ACCA AFM paper as this paper is quite practical. Students often found things learned in other papers, such as financial and management knowledge, linked with strategic papers such as ACCA SBL.

In addition to providing ACCA lectures online, I also wrote articles in ACCA AB magazine. Besides, I am the author of four accounting books. If you are interested in studying ACCA courses with me, please visit my website for further information, where you can find many of my ACCA demo video lectures.

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