Indirect Quotes

Exchange rate quotations can easily cause confusion. The market convention is to use indirect quotes; that is, a statement of units of foreign currency per US dollar (for example, DM 1.4736/ dollar). Thus, when economists expect the US dollar ($) to strengthen against the yen (¥), they expect the indirect quote (¥/$) of the exchange rate to rise, so the US dollar will purchase more Japanese yen. A weakening US dollar means the dollar will purchase less yen, so the indirect quote will fall.