bobbin Posted October 31, 2007 Share Posted October 31, 2007 When the Cdn dollar was worth less than the US dollar, it was quoted like this... Cdn$ 1.0385. At the same time, the Aus$ and NZ dollars were quoted like this..Aus$ 0.8945 and Nz$ 0.7336. (all quotes are dated). Why were/are the various dollar currencies not quoted in the same way? Today on Bloomberg they show the Cdn dollar as Cdn$ 0.9530, the Aus$ 0.9224 and NZ$ 0.7655. Of course I am not picking on Bloomberg as this is not their proprietary system. This is the common method. Now it is obvious that, for me at least, this method is flawed! There is a much larger difference in value in these currencies than this method shows. While it requires 95.30 Cdn cents to purchase one US$, it requires Aus$ 1.0776 to purchase one US$. And NZ$ 1.2345 to purchase one US$. (as of today Oct 31) When living in Canada, we traditionally (it was down so long!) thought of the Cdn$ as being worth so many cents on the US$, i.e. the way the Aus and NZ dollars have always been quoted. Not the method (used above) that shows how much it required to buy a US$. This question has bothered me for years! If no-one can explain this, perhaps someone could suggest a source to question. A source that would actually answer! Link to comment Share on other sites More sharing options...
fletchsmile Posted October 31, 2007 Share Posted October 31, 2007 Believe it's historic - all ex GBP territories when British Empire was largest. GBP is also quoted this way. 1 GBP is worth a number higher than 1 for any other currency. One amusing spin off in Thailand is the number of taxi drivers who assume GBP is the best/strongest currency to hold because you get 70 baht to the dollar => "Pown Sterlink No.1" probably explains one factor why they think all farang are rich - presumably by a factor of 70 for "puu dii angkrit" . On your next taxi journey try and raise the concept of purchasing power parity to your taxi driver in your best Thai. Be prepared to answer why British people earn twice as much as Americans under this logic Link to comment Share on other sites More sharing options...
percy2 Posted October 31, 2007 Share Posted October 31, 2007 One amusing spin off in Thailand is the number of taxi drivers who assume GBP is the best/strongest currency to hold because you get 70 baht to the dollar => "Pown Sterlink No.1" probably explains one factor why they think all farang are rich - presumably by a factor of 70 for "puu dii angkrit" . On your next taxi journey try and raise the concept of purchasing power parity to your taxi driver in your best Thai. Be prepared to answer why British people earn twice as much as Americans under this logic Been there done that. I'm not saying successfully mind you Cheers Link to comment Share on other sites More sharing options...
PCA Posted October 31, 2007 Share Posted October 31, 2007 Believe it's historic - all ex GBP territories when British Empire was largest. GBP is also quoted this way. 1 GBP is worth a number higher than 1 for any other currency. except for the Maltese Lira Link to comment Share on other sites More sharing options...
jbaldwin Posted October 31, 2007 Share Posted October 31, 2007 The reason goes back to to when the UK currency was made up of pounds, shillings and pence (one shilling was 12 pence and 20 shillings were one pound. It was extremely difficult to divide. Link to comment Share on other sites More sharing options...
samran Posted October 31, 2007 Share Posted October 31, 2007 Lets all sing it!! It's gold It's round Two dollars to the pound En-ger-land En-ger-land Link to comment Share on other sites More sharing options...
bobbin Posted October 31, 2007 Author Share Posted October 31, 2007 Ah guys..... All these references to GBP are missing the point. All three are former British colonies but not for a long long time. Aus$ and NZ$ are quoted one way and Cdn$ another. That blows your theory out of the water. Please re-read the original post again. This system, to one not following the market, make it appear that there is only 0.03 US cents difference between the Aus$ and Cdn$. Actually, there is about 0.13 US cents difference. Link to comment Share on other sites More sharing options...
lannarebirth Posted October 31, 2007 Share Posted October 31, 2007 I think your example is wrong. When the loonie was below parity it was quoted as decimal figure of less than one (on US based websites) and more than one on CDN based websites. Now that ot's above parity the situation is reversed and it list as number greater than one, like the GBP. If the NZD and AUD ever reach parity they will read as numbers above one (on US based websites). Link to comment Share on other sites More sharing options...
bobbin Posted November 1, 2007 Author Share Posted November 1, 2007 I think your example is wrong. When the loonie was below parity it was quoted as decimal figure of less than one (on US based websites) and more than one on CDN based websites. Now that ot's above parity the situation is reversed and it list as number greater than one, like the GBP. If the NZD and AUD ever reach parity they will read as numbers above one (on US based websites). No, you are incorrect in your recollection. As a Canadian, I have followed this for years. As I noted, sometimes Canadian sites would use the Aus and NZ method but NO international sites did so. Still does not address the impression that ,as Bloomberg etc. are reporting, there is only a small difference between Aus$ and Cdn$, When there is over 10% difference. Look for yourselves and see if you would realize this if you weren't clued into the real situation. Still waiting for someone to explain the different quoting methods, and also to address the current "incorrect" quotes. Do you think someone at Bloomberg or any other Forex site would answer this question? Link to comment Share on other sites More sharing options...
ZZZ Posted November 1, 2007 Share Posted November 1, 2007 In the Foreign Exchange Dealing world this is how you quote currencies: EURUSD 1.4461 USDJPY 115.41 GBPUSD 2.0780 USDCHF 1.1602 AUDUSD 0.9302 USDCAD 0.9453 This is standardized to avoid confusion when dealing in currencies. It is a bit of a mix but everyone in the business are used to it. It would, of course, make more sense to make all quotes relative to the US$ in the same way but that will probably not happen. When newspapers or banks quote the exchange rates it is usually different, they quote how much you get in the local currency for one unit of each of the foreign currencies, or the other way around, but not in a mixed way. Link to comment Share on other sites More sharing options...
lannarebirth Posted November 1, 2007 Share Posted November 1, 2007 I think your example is wrong. When the loonie was below parity it was quoted as decimal figure of less than one (on US based websites) and more than one on CDN based websites. Now that ot's above parity the situation is reversed and it list as number greater than one, like the GBP. If the NZD and AUD ever reach parity they will read as numbers above one (on US based websites). No, you are incorrect in your recollection. As a Canadian, I have followed this for years. As I noted, sometimes Canadian sites would use the Aus and NZ method but NO international sites did so. Still does not address the impression that ,as Bloomberg etc. are reporting, there is only a small difference between Aus$ and Cdn$, When there is over 10% difference. Look for yourselves and see if you would realize this if you weren't clued into the real situation. Still waiting for someone to explain the different quoting methods, and also to address the current "incorrect" quotes. Do you think someone at Bloomberg or any other Forex site would answer this question? http://stockcharts.com/h-sc/ui?s=$CDW...id=p15221446404 http://stockcharts.com/h-sc/ui?s=$XAD...&a=62573195 Link to comment Share on other sites More sharing options...
lannarebirth Posted November 1, 2007 Share Posted November 1, 2007 In the Foreign Exchange Dealing world this is how you quote currencies:EURUSD 1.4461 USDJPY 115.41 GBPUSD 2.0780 USDCHF 1.1602 AUDUSD 0.9302 USDCAD 0.9453 This is standardized to avoid confusion when dealing in currencies. It is a bit of a mix but everyone in the business are used to it. It would, of course, make more sense to make all quotes relative to the US$ in the same way but that will probably not happen. When newspapers or banks quote the exchange rates it is usually different, they quote how much you get in the local currency for one unit of each of the foreign currencies, or the other way around, but not in a mixed way. That's all correct. The issue is further confused by the fact that futures markets do not necessarily agree with the forex market's currency pairings. Link to comment Share on other sites More sharing options...
bobbin Posted November 1, 2007 Author Share Posted November 1, 2007 http://stockcharts.com/h-sc/ui?s=$CDW...id=p15221446404 http://stockcharts.com/h-sc/ui?s=$XAD...&a=62573195 Yes, you got me on the first link but the second wasn't neccessay because that's the common way to quote Aus$ and NZ$. I knew I should not have said that no international sites used the percentage value vs. the US$. And then I went and capitalized the NO.... But won't someone respond to the even more interesting way Bloomberg is quoting these currencies? I'm getting lazy to explain again but their current method does not make sense re the spread between Cdn$ and Aus$ and NZ$ Link to comment Share on other sites More sharing options...
ZZZ Posted November 1, 2007 Share Posted November 1, 2007 You are correct that it makes no sense. The way Bloomberg is quoting is the historically standardized way of quoting different currency rates, this is the way it's done among forex traders. CDN$ is quoted as CDN$ per US$, AU$ is quoted as US$ per AU$. This is just the way it is, yes it makes no sense but it will probably not change, get used to it. Link to comment Share on other sites More sharing options...
pkrv Posted November 1, 2007 Share Posted November 1, 2007 In the Foreign Exchange Dealing world this is how you quote currencies:EURUSD 1.4461 USDJPY 115.41 GBPUSD 2.0780 USDCHF 1.1602 AUDUSD 0.9302 USDCAD 0.9453 This is standardized to avoid confusion when dealing in currencies. It is a bit of a mix but everyone in the business are used to it. It would, of course, make more sense to make all quotes relative to the US$ in the same way but that will probably not happen. When newspapers or banks quote the exchange rates it is usually different, they quote how much you get in the local currency for one unit of each of the foreign currencies, or the other way around, but not in a mixed way. I'm sorry not true, actually most is contained in EFX= and the reintroduced FXFX and FXFY pages And Bloomberg's flirtation with EBS - good luck, I have attended launch seminars etc, no clue, years on. Link to comment Share on other sites More sharing options...
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