The buying and selling of currency is done in pairs. The rates are also quoted in pairs. So, if you are trading in EUR/JPY and the quote is 119.50, then the rate of foreign exchange between the currencies is 119.62 yen.
Currency is quoted in two ways – Direct quote and indirect quote. If the quote is for USD/JPY and for the USD, then the quote is a direct quote.
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Direct quote – A direct quote is when the rate quoted is for the base currency. So, when you are trading with Rupee/USD, and the quote is 43/1, then it means that you have to pay 45 rupees to buy 1 USD.
Indirect Quote – This quote means the amount of domestic currency you require to buy foreign currency. The position of Rupee/USD is reversed here. If the indirect quote for this currency pair is $0.23, then it means that you require $.23 to buy 1 Rupee.
The Forex market revolves around the USD and is usually the base currency for all exchanges with a few exceptions.