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Bid and Ask Quotations

Interbank quotations are given as a bid and ask (also referred to as offer). A bid is the price (i.e., exchange rate) in one currency at which a dealer will buy another currency.

An ask is the price (i.e., exchange rate) at which a dealer will sell the other currency. Dealers bid (buy) at one price and ask (sell) at a slightly higher price, making their profit from the spread between the buying and selling price.

Bid and ask quotations in the foreign exchange markets are superficiality complicated in that the bid for one currency is also the ask for the opposite currency. A trader seeking to buy dollars with Swiss francs is simultaneously offering to sell Swiss francs for dollars.

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