Forex Quotes

Does it ever concern anyone that some of the financial press quote exchange rates incorrectly? For example, the WSJ and Yahoo Finance quote the EUR:USD = 1.34 rate as EUR/USD = 1.34. In reality the EUR/USD should be 0.746 with the Euro being in the numerator and the USD in the denominator, while the EUR:USD has the USD in the numerator and the EUR in the denominator. This does not seem to be the case for some sourses. The CFA curriculum has specified between these two quoting conventions, but I think this could be a source of confusion for people not familiar to forex quotations. I belive that this is an incorrect use of the / mark which could be misunderstood as faction with the Euro in the numerator and the USD in the denominator, when in fact it is the reverse (quoted in dollars). Let me know your thought!

Well, the system is inconsistent, but for the most part, people who trade FX are used to it. If they were to suddenly change the quoting convention for EUR or GBP, this would cause far more confusion then leaving it the way it is.

Yes, there is a difference between a ‘/’ and / as a fraction. Normally the major currencies are quote ‘/’ not meaning a fraction if that makes sense.

Mostly you would see quotes like USDJPY, EURUSD, EURCHF, etc etc… in the market and most of instutional documentation. basically USDJPY means JPY/USD… or you can say USDJPY 80 is 1USD = 80JPY. And you will always see USDJPY, you wont see JPYUSD, so that is also one thing. But finance literature (and trading books) might confuse you, they often use (Reference Currency)/(Commodity Currency), which looks confusing at first but commodity currency is basically your home currency, that should be followed but you fill find them exchanged sometimes.

The inconsistencies annoy me to. I don’t mind the BASE:QUOTE convention, but it is just crazy to use / as the separator. I think / should always mean X per Y, whereas the BASE:QUOTE generally means Quote Currency / Base Currency.

I agree…the / make it look more like a fraction rather than the base:quote convention.