Currency Exchange Quotes: Offer

CFA Level II Economics
#1

Just to try to understand something on that could be basic.

When given a quote for say GBP/USD with a spread 0.6211 - 0.6250. In this case 0.6211 is the bid and 0.6250 is the offer. The dealer buys USD and sells GBP at 0.6250

There does not seem to be much said about use of the offer in my textbook and most examples only relate to the bid.

To use the offer of 0.6250, where the dealer buys GBP and sells USD, do we then need to automatically take the reciprocal so we should be using 1/0.6250 = 1.6?

#2

Doing that will give you a USD/GDP bis-ask spread of USD/GDP 1.61 - 1.60, no? I believe you also need to reverse the quotations.

#3

Hi yup I believe that would be the case if the quote were flipped.

It seems like my textbook talks a lot about using the bid side and even going to the extent of flipping the quote eg GBP/USD to USD/GBP but there’s little in the way of using the offer side quote directly so why that is so

#4

Your textbook is a bigot.