oK… Expect JPY/USD spot rate to fall by 2% from its current level. The FCRP is closest to: My intuition tells me: JPY/USD fell, so, F-S/S = -2%… FCRP = -2% -(Rdc- Rfc) so, = -2- (3.88-7) = +1.12/// But schweser gives the answer as - 1.12% and in the explanation they do 2-(7-3.88) For me if it is quoted JPY/USD, then JPY is Dom… What am I missing Thanks and lets kill this
If it were quoted JPY:USD, JPY would be DC. However, JPY/USD is a direct quote to a US investor, with USD as DC. I think…
Really…I haven’t thought of that, that might be it…tricky… I always first the one that comes first is dom… I think in Brazil when we ask, how much is the dollar? People say its R$1.85 …its R$/$, thats our perspective… Tks…Anybody could confirm this?
I think SM has it backwards. USD: JPY = JPY/USD JPY is a direct quote. The domestic currency i think depends on the question. The question will say whether from the perspective of US or JPY investor. For example if they say USD investor you would need to take the inverse of all the quotes.
Well, in the vignette it talks about the US bank, so its an american perspective, but if you’re given JPY/USD then JPY is dom right? Why doesnt it work the way I did it?Tks!
Can you check the question your referencing again, i looked in the econ section but questions don’t go passed 20ish. Are you referring to something else? If its from the perspective of a US bank then US is the domestic currency. If they give you Jpy/USd then you need the inverse of the quotes.
Think of “/” as “per”, a quote of JPY/USD is units of foreign ccy per domestic ccy. USD is the DC.
i looked it up, in the answers they show they take the inverse of the spot and expected spot. The domestic currency is whoever the investor is. They gave you an indirect quote so you need to take the inverse in order to put the USD as a direct quote.
There you go Justin, thanks…