Updated February 5, 1999
In general, VOFC = Value of the Foreign Currency in terms of dollars.
Exchange rates have a numerator and a denominator. The denominator has 1-unit of currency. If the exchange rate is 125¥/$1 , this is called the value of the dollar, VOD, in terms of yen.
If the exchange rate is $.0080/1¥ , this is called the value of the yen, VO¥, in terms of dollars. The one exchange rate is the reciprocal of the other and the product of the two exchange rates is always equal to 1.
The denominator has one-unit of the currency involved and tells you which exchange rate is involved:
It is useful to note that the price or value of something means the price of one-unit of that something. The "value of a Deutsche Mark in terms of dollars" and the "price of Deutsche Marks with respect to (wrt) dollars" and the "dollar price of Deutsche Marks" all involve the # of dollars over 1DM and thus give the VODM.
The following table provides a guide to the language of exchange rates.
| 1. value of a DM wrt the dollars | value of a dollar wrt the DM
| 2. price of a DM in terms of dollars | price of a dollar
in terms of DM's | 3. price of DM's in terms of dollars |
price of dollars in terms of DM's | 4. dollar price of DM's
| DM price of dollars | 5. $/DM exchange rate |
DM/$ exchange rate | 6. dollar's exchange rate against the DM
| DM's exchange rate against the dollar | 7. (Wall Street
Jounal) US dollar equivalent | currency per US dollar | 8.
direct exchange rate | indirect exchange rate | 9. direct
quote | indirect quote | |
A rising value of foreign currency: same impact as falling dollar
A rising dollar (falling value of foreign currency): opposite impact of
falling dollar
Page created May 27, 1998