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I am having an enormous amount of confusion on exchange rates.

If for example , i have an exchange rate of £/$=1.10, i know that with one pound i can buy 1.10 dollars. First question: So can the exchange rate be written as 1.10$?.

Now, in terms of appreciation and depreciation:

lets say that the exchange rate increases to £/$=1.20.

On investopedia i read that: As a rule of thumb, the increase or decrease of a rate always corresponds to the appreciation/depreciation of the base currency, and the inverse corresponds to the quoted currency.

So according to investopedia, the pound has appreciated.

But then i read another article that states:

if you have an exchange rate quoted as X/Y,

If X/Y goes up then Y appreciated..

If X/Y goes down then Y depreciated..

Then according to this article, the dollar has appreciated.

Can somebody tell me in simple terms how to understand what currency is appreciating/depreciating ? And can somebody please answer my first question?

EDIT: this is not a dupe. I am trying to understand how to read exchange rates and why two articles give opposing answers on the same topic.

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If you look further down the second thread you link to, it says:

CFA Institute’s convention is USD/GBP 1.5253 means $1.5253 = £1.0.

This is not the standard convention. Your first link does use the standard convention, which is why they seem to give contradictory results.

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  • Thanks! Greatly appreciate it. I may have another question : if , for example, In 1999, the euro was valued at $1.18, and on On June 16, 2016, it was valued at $1.1132, then the Euro has depreciated and the USD has appreciated. Then can i write the exhange rate for 1999 as EUR/USD=1.18? Or should i right it as EUR/USD=1.18$? (meaning should i add the dollar sign at the end). – GGGG Nov 25 '19 at 15:56
  • No dollar sign needed. Wikipedia gives a decent overview of the syntax. – bobajob Nov 25 '19 at 16:00
  • But then its right to say that the exchange rate is EUR/USD and not USD/EUR, correct? – GGGG Nov 25 '19 at 16:24
  • That is correct. – bobajob Nov 25 '19 at 16:27

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