# Two Way Quotes

#### What is Two Way Quotes?

A two-way quote is a type of quote that gives both the bid or buying and the ask or selling price of a security in the Inter-Bank Market. This means each quote will have two prices – one rate for buying the base currency and the other for selling the base currency. Example-

USD/INR               67.50/    68.40

Do Remember: In two way quote the ask rate will always be higher than bid rate.

Bid Rate: Price at which market is willing to buy the base currency

Ask Rate: Price at which market is willing to sell the base currency

Examples: –An Indian importer received a bill of \$10,000. He went to the bank and the bank gives him the below quote-

1\$ = INR 68.50 – 69.10

Now find out how much Indian Rupees the importer needs to pay to buy \$10,000?

Ans: – In the given example the requirement of the importer is to buy the \$ and the base currency is also \$.

Relevant Rate in this case is Ask Rate i.e. 1\$ = INR 69.10

If cost of 1\$ is INR 69.10, therefore cost of \$10,000 would be INR 6,91,000. Therefore, importer would pay INR 6,91,000 to buy \$ 10,000.

Example: An Indian exporter is about to receive \$10,000 for goods exported to USA. He went to the bank and bank provides him the below quote-

1\$ = INR 68.50 – 69.10

Now find out how much Indian Rupees the exporter will receive by selling \$10,000?

Ans: – In the given example the requirement of the exporter is to sell the \$ and the base currency is also \$.

Relevant Rate in this case is Bid Rate i.e. 1\$ = INR 68.50 Therefore, exporter would receive INR 6,85,000 (\$10,000 * INR68.50) by selling \$10,000

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