# Indirect Quote vs. Direct Quote: Definition and Key Differences

## What Is an Indirect Quote?

An indirect quote in foreign exchange markets shows the amount of foreign currency needed to [buy or sell](https://www.investopedia.com/best-brokers-for-forex-trading-4587882) one unit of the domestic currency. Also known as a "quantity quotation," this type of quote positions the domestic currency as the [base currency](https://www.investopedia.com/terms/b/basecurrency.asp) and the foreign currency as the [counter currency](https://www.investopedia.com/terms/c/counter-currency.asp). In contrast, a direct quote does the opposite by pricing foreign currency in terms of the domestic currency.

### Key Takeaways

*   An indirect quote in forex denotes the amount of foreign currency needed to exchange for one unit of the domestic currency.  
    
*   Indirect quotes are also termed "quantity quotations" because they reflect the quantity of foreign currency required to buy domestic currency units.  
    
*   A direct quote, contrastingly, states the price of one foreign currency unit in terms of domestic currency.  
    
*   When the exchange rate in an indirect quote decreases, it signifies the depreciation of the domestic currency.  
    
*   Understanding whether a quote is direct or indirect is crucial for accurately pricing cross-currency rates.

## How Indirect Quotes Work in Forex

An indirect quote is the opposite, or reciprocal, of a [direct quote](https://www.investopedia.com/terms/d/directquote.asp), 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](https://www.investopedia.com/terms/forex/u/usd-united-states-dollar.asp)) 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](https://www.investopedia.com/terms/forex/c/cad-canadian-dollar.asp)), Japanese yen ([JPY](https://www.investopedia.com/terms/forex/j/jpy-japanese-yen.asp)), and Indian rupee ([INR](https://www.investopedia.com/terms/i/inr.asp))—as the counter currency. Exceptions to this rule are the [euro](https://www.investopedia.com/terms/e/euro.asp) and Commonwealth currencies like the British pound (GBP), Australian dollar ([AUD](https://www.investopedia.com/terms/forex/a/aud-usd-australian-dollar-us-dollar-currency-pair.asp)), and New Zealand dollar ([NZD](https://www.investopedia.com/terms/forex/n/nzd-new-zealand-dollar.asp)), which are typically quoted in indirect form (for example, [GBP](https://www.investopedia.com/terms/g/gbp.asp) 1 = USD 1.30).

Take the CAD, trading at 1.2500 to the USD, as an example. In Canada, the indirect quote is C$1 = US$0.8000 (1/1.2500). However, the conventional quotation in [foreign exchange markets](https://www.investopedia.com/terms/forex/f/foreign-exchange-markets.asp) 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.

A lower [exchange rate](https://www.investopedia.com/terms/e/exchangerate.asp) in an indirect quote means the domestic currency is weakening. Continuing with the above example, if the USD/CAD changes to US$1 = C$1.2300, the USD is weaker because less CAD is needed for 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.

## Navigating Currency Cross Rates

What about cross-currency rates, which express the price of one currency in terms of a [currency other than the U.S. dollar](https://www.investopedia.com/terms/r/reciprocal-currency.asp)? Traders should identify whether a quote is direct or indirect to price cross-rates accurately.

For example, if USD/JPY is 100 and USD/CAD is 1.2700, what is CAD/JPY from Canadian and Japanese views?

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:

1 JPY (indirect) = 1.2700 ÷ 100 = 0.0127 CAD

## Is There Another Name for an Indirect Quote?

Yes. 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.

## How Does an Indirect Quote Work?

In an indirect quote, a lower exchange rate implies that the domestic currency is depreciating, or becoming weaker.

## What Is the Opposite of an Indirect Quote?

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.

## The Bottom Line

An indirect quote, also known as a "quantity quotation," shows how much foreign currency is needed to purchase one unit of domestic currency. Unlike a direct quote, which prices one unit of foreign currency in terms of variable units of domestic currency, indirect quotes use the domestic currency as the base.

In practical terms, if the exchange rate drops in an indirect quote, it indicates the domestic currency is depreciating. By understanding whether a quote is direct or indirect, traders can better assess cross-currency rates. This understanding is vital for both aspiring investors and experienced traders in navigating the complexities of foreign exchange markets.