What Is an Indirect Quote?
The term indirect quote is a currency quotation in the foreign exchange marketthat expresses the variable amount of foreign currency required to buy or sell one unit of the domestic currency. An indirect quote is also known as a “quantity quotation,” since it expresses the quantity of foreign currency required to buy units of the domestic currency. In other words, the domestic currency is the base currency in an indirect quote, while the foreign currency is the counter currency.
Key Takeaways
- An indirect quote in the foreign exchange markets expresses the amount of foreign currency required to buy or sell one unit of the domestic currency.
- An indirect quote is also known as a “quantity quotation,” since it expresses the quantity of foreign currency required to buy a unit of the domestic currency.
- The opposite of an indirect quote is a direct quote which expresses the price of one unit of a foreign currency in terms of variable number of units of the domestic currency.
Understanding Indirect Quotes
An indirect quote is the opposite, or reciprocal, of a direct quote, also known as a “price quotation,” which expresses the price of one unit of a foreign currency in terms of a variable number of units of the domestic currency.
As the U.S. dollar (USD) is the dominant currency in global foreign exchange markets, the convention is to generally use direct quotes that have the U.S. dollar as the base currency and other currencies—like the Canadian dollar (CAD), Japanese yen (JPY) and Indian rupee (INR)—as the counter currency. Exceptions to this rule are the euro and Commonwealth currencies like the British pound (GBP), Australian dollar (AUD) and New Zealand dollar (NZD), which are typically quoted in indirect form (for example GBP 1 = USD 1.30).
Consider the example of the CAD, which we assume is trading at 1.2500 to the U.S. dollar. In Canada, the indirect form of this quote would be C$1 = US$0.8000 (i.e. 1/1.2500). However, the conventional quotation in foreign exchange markets is 1.2500, which is an indirect quote from the U.S. perspective because it shows how much of a foreign currency (CAD) is required to get 1 USD. Conversely, USD 0.8000 would be a direct quote.
In an indirect quote, a lower exchange rate implies that the domestic currency is depreciating, or becoming weaker. Continuing with the above example, if the USD/CAD quotation now changes to US$1 = C$1.2300 (indirect quote), then that means the USD (domestic currency) has gotten weaker as less CAD would be needed to get 1 USD. The direct quote, which is 0.8130 (1/1.2300), shows that 1 CAD will get you USD 0.8130, as opposed to 0.8000.
Currency Crosses
What about cross-currency rates, which express the price of one currency in terms of a currency other than the U.S. dollar? A trader or investors should first ascertain which type of quotation is being used—direct or indirect—to price the cross-rate accurately.
For example, if USD/JPY is quoted at 100, and USD/CAD is quoted at 1.2700, what is the quotation of CAD/JPY from both the Canadian and Japanese perspectives.
CAD/JPY (conventional quote) = USD/JPY ÷ USD/CAD
So, if domestic currency is CAD then
1 CAD (indirect) = 100 ÷ 1.2700 = 78.74 JPY
and
if domestic currency is JPY then
So, 1 JPY (indirect) = 1.2700 ÷ 100 = 0.0127 CAD
FAQs
Direct vs. Indirect Quotations. On the surface, differentiating between direct and indirect quotations is easy. Direct quotations have a speaker's or writer's exact words set off in quotation marks. Indirect quotations have no quotation marks because they don't use the writer's exact words.
What is the difference between direct and indirect quotes? ›
A direct quote (or direct quotation) is the exact words taken from an original source and used in a second piece of writing. An indirect quote (or indirect quotation) is the idea or fact taken from an outside source and used in a second piece of writing.
What is an example of a direct quotation and an indirect quotation? ›
Indirect speech reports a character's words as they would have said them, without the constraints of direct speech. For example: Direct speech: Jamie said, “That's not fair.” Indirect speech: Jamie said that wasn't fair.
What is an indirect quote quizlet? ›
-indirect quotations: use the speaker's ideas but not his or her exact words. because the ideas are paraphrased, quotation marks are NOT used.
What is an example of an indirect citation? ›
Indirect Quotation with Page Numbers
In the following example, Kane is the source in which the Saltzman quote was found: A common definition is “mindfulness is paying attention to your life, here and now, with kindness and curiosity” (Saltzman, 2014, p. 1, as cited in Kane, 2020, p. 117).
What is a direct quote? ›
A direct quotation is when you take another person's words and place them in your own document. These must always be placed inside quotation marks and given appropriate attribution (MLA, APA, Chicago, etc). When should I quote?
What is the difference between direct and indirect examples? ›
Direct speech – reporting the message of the speaker in the exact words as spoken by him. Direct speech example: Maya said 'I am busy now'. Indirect speech: reporting the message of the speaker in our own words. Indirect speech example: Maya said that she was busy then.
What is an indirect quote also known as? ›
An indirect quote is also known as a “quantity quotation,” since it expresses the quantity of foreign currency required to buy a unit of the domestic currency.
Which sentence is a direct quotation? ›
Direct quotations involve incorporating another person's exact words into your own writing. Quotation marks always come in pairs. Do not open a quotation and fail to close it at the end of the quoted material. Capitalize the first letter of a direct quote when the quoted material is a complete sentence.
Which of the following is an example of an indirect quotation? ›
Answer: B) The captain said that the ship will leave in one hour. Explanation: An indirect quotation is when the meaning but not the exact words of something someone spoke is referred to, they frequently begin with "that" or "if" and quotation marks are not used.
A direct quote is any sentence that convey's the primary source's idea word for word.
How do you indicate an indirect quote? ›
To reference an indirect quotation: Include both the original author and the author of the work where the quote/idea was found in the in-text reference with the abbreviation qtd. in. In the reference list, provide the details of the author of the work in which you found the quotation or idea.
How do you change a direct quote to an indirect quote? ›
Changing verb tenses
- Direct: The Minister said, "There will be no growth. this year."
- Indirect (same year): The Minister said that there will be no. growth this year.
- Indirect (later year): The Minister said that there would be no. growth in that year.
In writing a narrative essay, for example, you might recount a time your mother gave you advice by using a direct quotation, like so: Mom said, “Always brush your teeth before bed.” Or you could use an indirect quotation, like so: Mom said that I should always brush my teeth before bed.
What is the main difference between direct and indirect citations? ›
Direct citations are those that include the surname of the author as part of the text of the sentence and the date within parentheses. Indirect citations give both the surname and the date parenthetically.
What are examples of indirect source? ›
For example, the author of a book you are consulting—let's say her name is Perez—cites a journal article she consulted that backs up her book's claims. If you incorporate Perez's discussion of that article into your paper rather than reading and citing the original article yourself, you are using an indirect source.
What is direct and indirect speech quotes? ›
Direct: He said, "I've been running around all day." Indirect: He said that he had been running around all day.
What is an example of direct and indirect dialogue? ›
For example:
- Direct Speech: “I am going to the park,” said Sarah. ...
- Indirect Speech: Sarah said that she was going to the park. ...
- Differences in verb tense and pronoun usage: In direct speech, the verb tense and pronouns remain the same as the original speaker's words.
Quoted speech uses quotation marks and the exact words that a person has said. Reported speech (also called indirect speech) relates what the person said, but does not use the exact words.
What is the indirect quote method? ›
An indirect quote is also known as a “quantity quotation,” since it expresses the quantity of foreign currency required to buy units of the domestic currency. In other words, the domestic currency is the base currency in an indirect quote, while the foreign currency is the counter currency.
