Bid and ask rate.

• Bid = It is a rate at which you can sell from market.

• Ask = It is a rate at which you can buy from market.
• Always remember bid is less then ask.
• Example,

• Brazilian real is quoted at R 0.9955–1.0076/U.S.$

Bid Ask
Understanding Bid and ask rate.
Bid Ask

• Brazilian real is quoted at R 0.9955–1.0076/U.S.$

• Bid price R 0.9955 says you can sell 1 dollar for 0.9955 Brazilian real.
• Means selling USD and buying R.

• Ask price R 1.0076 says you can buy 1 dollar for 1.0076 Brazilian real.
• Means buying USD and selling R.
Example
• Suppose that the Brazilian real is quoted at R 0.9955–1.0076/U.S.$ and the Thai
baht is quoted at B 25.2513–3986/US$. What is the cross rate (direct) quote for
the real in Bangkok?
𝐵𝑖𝑑 𝑟𝑎𝑡𝑒 𝑓𝑜𝑟 𝑇ℎ𝑎𝑖 𝑏𝑎ℎ𝑡/𝑈.𝑆
B
$
• Bid cross rate = 𝑅
𝐴𝑠𝑘 𝑟𝑎𝑡𝑒 𝑓𝑜𝑟 𝐵𝑟𝑎𝑧𝑖𝑙𝑖𝑎𝑛 𝑟𝑒𝑎𝑙/𝑈.𝑆.$ $

Selling USD and buying B

=
Buying USD and selling R
Buying B
Selling R
Which is nothing but bid of thai for real.