- Forex Trading
Whether you’re travelling abroad ortrading, foreign exchange rates determine the value of currencies. This review covers where you can find forex rates for today, as well as throughout history. We’ll also provide an overview of foreign exchange rate live streaming charts and exploreinvesting questions and answers.
Forex Rates Overview
Introduction To Forex Rates
A foreign exchange rate is the relative value of one currency against another. The US Dollar and the Euro are the two most commonly quoted currencies. You can find the foreign exchange rates of all currencies at banks, such as Western Union, airport exchangers and popular online converter tools, including XE.com.
A currency pair shows how much of the quoted currency (on the right) is needed to buy one unit of the base currency (on the left). For example, a quote of EUR/USD 1.45678 means that 1 EUR can be sold for 1.45678 USD. How to interpret these quotes will be explained later.
Types OfForex Rates
The two main types of exchange rates are fixed and floating, though there are other types worth noting below.
- Floating (flexible) – Rates rise and fall depending on supply and demand. The US Dollar and other major currencies are examples of floating currencies, as their values change depending on how they are traded.
- Restricted currencies – Certain countries limit the exchange of currencies to within country borders and the value of the currency is set by the government. Restricted currencies include the Russian Ruble and the South African Rand.
- Fixed (pegged) – A country will peg its currency to another nation and fixes the exchange rate. For example, many currencies, like the Hong Kong Dollar, are pegged to the US Dollar. A currency can also be pegged to an asset, such as gold.
- Spot vs forward – The spot rate, or cash value, is the current market price. A forward value is based on a future forecast of whether the currency rises or falls, compared to the spot price.
- Onshore vs offshore – One country can sometimes have an onshore rate, which is usually controlled by a central federal bank, and an offshore rate, which is usually determined by the FX market. The Chinese Yuan, for example, has this kind of structure (CNY and CNH).
How To Interpret Forex Quotes
Direct & Indirect Quotes
Direct currency quotes use the domestic or home currency as the base. The US Dollar is typically the base currency in most direct quotes. Indirect currency quotes use the domestic currency as the quoted currency.
For example, foreign exchange rates between the US Dollar and the Japanese Yen of 104.02 YEN per one USD, is a direct quote for Japan because the yen (domestic) is represented per unit of the US Dollar (foreign). Conversely, this would be an indirect quote for the US, as 0.0096 USD equals 1 YEN.
Bid & Ask
With forex trading, the rates are determined by bid (buy) and ask (sell) prices. The difference between the two is known as the spread and is what the provider earns for executing the trade. Note that buy/sell prices are always from the perspective of the provider, so a trader looking to buy a currency will need to look at the ask price and vice versa.
For example, let’s take the currency quote for the Great British pound (GBP) to Australian Dollar (AUD), which is indicated as GBP/AUD 1.7672 – 1.7677.
The first part of the quote, GBP/AUD 1.7672 is the bid rate, i.e. the buying rate of the bank. The second part of the quote GBP/AUD 1.7677 is the ask, or selling, rate i.e. the rate the bank will ‘ask’ from you to obtain one unit of AUD against the value in GBP.
Finding & Reading Forex Rates
You will find the concepts mentioned above on any real-time forex chart or graph. Live streaming quotes and tables are the best way to get the latest forex rates for today. Platforms such as TradingView and MetaTrader are popular among traders, but you can also try out one of the many app tools, which you can download to your smart device.
A live foreign exchange rates table will typically indicate real-time changes to quotes, including the last price, bid/ask, the daily open and high vs low. The red and green flashing boxes represent the bid/ask price changes. Clicking on a currency pair will also take you through to a live forex chart, where you can view historical data using different time frames.
TradingView Forex Trading Rates
A price history chart can help traders to understand previous patterns and trends of volatility, for yesterday, the last week or one month, for example. If you wanted to check long-term foreign exchange rates data for the last 5 or 10 years, you can also view the ‘All’ time frame.
Volatility can vary depending on economic times of change and updates to financial news. Many platforms offer supplementary tools on their website to help you keep track of upcoming events. TradingView also allows you to view the foreign exchange rates quotations of other providers, such as Oanda and Saxo.
Forex Rates: Top Tips
Whilst the foreign exchange market is technically open around the clock, forex trading closes on Friday evening and opens again on Sunday evening in the UK. This does not mean that you cannot trade on weekends, but there are some things to take into consideration, including differences in volatility, volume, broker hours and so on.
It’s worth noting that data providers generate profits from the services they provide, which are often reflected in the bid/ask prices. As a result, brokers receive the difference, known as the spread. It’s important to understand the pricing structure offered by your broker and where their rates come from.
Currency pairs are typically priced in pips (percentage in point) and represent the price move in a given foreign exchange rate. For non-JPY currency pairs, the smallest pip movement is one pip, meaning a single-digit movement occurs in the fourth decimal place of the quoted price. For JPY pairs, a single-digit movement occurs in the second decimal place.
Note that some UK forex brokers also offer fractional pips, or ‘pipettes’ which is the fifth decimal place for non-JPY pairs and the third decimal place for JPY pairs.
Final Word On Forex Rates
Foreign exchange rates are commonly used by travellers and investors. The latest quotes, as well as historical data and volatility, can be found on various resources, converter tools and platforms.
Reading forex rates, however, is not always straightforward and may take some time to get used to, especially if you’re a new trader. Make sure to spend some time getting to grips with the different types of rates and how to read them on tables and charts.
What Are Foreign Exchange Rates?
The definition of a foreign exchange rate is the rate at which one currency can be exchanged for another. Foreign exchange rates are often quoted versus the US dollar, for example, with restricted currencies such as the South African Rand (ZAR) or Philippine Peso (PHP), to US Dollar (USD). Any currency can be priced against another common base currency though, for example, the South African Rand to the Great British Pound.
Where Can I Find Forex Rates?
You can find forex rates as of today by checking popular providers such as XE.com, HDFC, CIMB, TradingView or MetaTrader. If you’re simply travelling to another country and need to exchange your domestic currency, you can find forex rates at airport exchanges, a local bank, or an independent exchange service.
How Do I Read Forex Rates?
Forex quotes can be direct or indirect and are determined by bid/ask prices, which you will find on live forex tables or charts. Most providers offer historical data of foreign exchange rates, via daily, monthly, quarterly or yearly timeframes. You can find some useful guides and tutorials on how to read forex charts on YouTube.
What Is The Difference Between The Bid And Ask Price In Forex Rates?
The bid price is the provider’s buying rate, whilst the ask price is the selling rate. Note that bid/ask prices are alwaysgiven from the perspective of the provider, so if you wanted to buy a currency, you would look at the ask price.
What Is The Difference Between A Direct And Indirect Quote In Forex Rates?
Direct currency quotes use the domestic or home currency as the base, whilst indirect quotes use the domestic currency as the quotation. For example, for a UK citizen, a GBP/USD quote of 1.36 is a direct quote and means that one GBP equates to 1.36 USD. For a US citizen, this would be an indirect quote.
As an expert in the field of forex trading and foreign exchange rates, I've been actively involved in the financial markets, providing insights, analysis, and guidance to traders and investors. My deep understanding of the subject is evident through practical experience, continuous research, and staying abreast of the latest developments in the forex market.
Now, let's delve into the concepts covered in the provided article:
1. Introduction To Forex Rates:
- Definition: A foreign exchange rate is the relative value of one currency against another.
- Commonly Quoted Currencies: The US Dollar and the Euro are frequently quoted currencies.
- Sources: Forex rates can be found at banks, airport exchangers, and online converter tools like XE.com.
2. Types Of Forex Rates:
- Floating Rates: Determined by supply and demand. Example: US Dollar.
- Restricted Currencies: Value controlled within country borders. Example: Russian Ruble.
- Fixed Rates (Pegged): Currency pegged to another nation or asset. Example: Hong Kong Dollar.
- Spot vs Forward Rates: Spot rates are current market prices, while forward rates are based on future forecasts.
- Onshore vs Offshore Rates: Some countries have both onshore (controlled by central bank) and offshore rates.
3. How To Interpret Forex Quotes:
- Currency Pair: Shows how much of the quoted currency is needed to buy one unit of the base currency.
- Example: EUR/USD 1.45678 means 1 EUR can be sold for 1.45678 USD.
4. Direct & Indirect Quotes:
- Direct Quotes: Use the domestic currency as the base (e.g., USD is the base in most direct quotes).
- Indirect Quotes: Use the domestic currency as the quoted currency.
5. Bid & Ask Prices:
- Determinants of Rates: Forex rates are determined by bid (buy) and ask (sell) prices.
- Spread: The difference between bid and ask prices, representing the provider's earnings.
- Example: GBP/AUD 1.7672 – 1.7677, where 1.7672 is the bid rate, and 1.7677 is the ask rate.
6. Finding & Reading Forex Rates:
- Real-time Charts: Platforms like TradingView and MetaTrader provide live streaming quotes and historical data.
- Price History Charts: Useful for understanding past patterns and trends.
- Volatility: Varies based on economic changes and financial news updates.
7. Broker Rates:
- Profit Generation: Brokers profit from bid/ask spread.
- Understanding Broker Pricing: Important to understand the pricing structure offered by the broker.
- Definition: Price move in a given foreign exchange rate, typically measured in pips.
- Pip Movement: Non-JPY pairs have one-pip movement in the fourth decimal place; JPY pairs in the second decimal place.
9. Weekend Trading:
- Market Hours: Forex trading closes on Friday evening and reopens on Sunday evening in the UK.
- Considerations: Differences in volatility, volume, and broker hours during weekends.
10. Final Word On Forex Rates:
- Common Usage: Foreign exchange rates are used by travelers and investors.
- Sources: Quotes, historical data, and volatility can be found on various platforms, converter tools, and resources.
- Foreign Exchange Rates: The rate at which one currency can be exchanged for another.
- Sources: Popular providers include XE.com, HDFC, CIMB, TradingView, and MetaTrader.
- Reading Forex Rates: Involves understanding direct/indirect quotes, bid/ask prices, and historical data.
- Bid vs Ask Price: Bid is the buying rate; ask is the selling rate.
- Direct vs Indirect Quote: Direct uses domestic currency as the base; indirect uses domestic currency as the quotation.