Foreign exchange relations - denominator

CFA Level II
#1

In the foreign exchange relations with a fraction, do we always have the quoted currency (the “one”) in the denominator?

#2

What do you mean? Like: AED 3.675/$

#3

For example, with PPP: S1 / S0 = 1+I DC / 1+I FC The currency (FC) in the denominator is the quoted currency (FC:DC). I am looking for a general rule to define the currency in the denominator and believe it is true that it is always the quoted currency. Can anyone confirm this?

#4

Yes that is correct. For eg: So if you have $3.345/Euro which is equal to 1Euro:3.345 be sure that the will be in the numerator and euro will be in the denominator which will given the equation as: S1/S0 = 1+I $ / 1+I Euro

#5

Because you are pricing the currency in the denominator.