Fundamentals of Business

Forward exchange rate

Currency price set between two parties for delivery on a future date. If that date lies within two business days, it is a spot transaction; otherwise it is a forward exchange transaction.

A typical example
Western Union money transfers.
Fixed exchange rate.
System in which the value of a country's currency, in relation to the value of other currencies, is maintained at a fixed conversion-rate through government intervention.

Floating exchange rate

System in which a currency's value is determined solely by the interplay of the market-forces of demand and supply (which, in turn, is determined by the soundness of a country's basic economic position), instead of by government intervention. However, all central banks do try to defend these rates within a certain range by buying or selling their country's currency as the situation warrants. NOTE: Exchange rates are concerned only with inte international business.

Quotations
An exchange rate quotation is given by stating the number of units of a price currency that can be bought in terms of 1 unit currency (also called base currency ase currency). For example, in a quotation that says the EUR/USD exchange rate is 1.2 (USD per EUR), the price currency is USD and the unit currency is EUR.

Quotes using a country's home currency as the price currency (e.g., £0.574744 = $1 in the UK) are known as direct quotation or price quotation (from that country's perspective) and are used by most countries. Example
Extract from Yahoo·com

Yahoo currency converter Currency Conversion Results
Exchange
Symbol
British
Pound Ra Rate te U.S.
Dollar Bid Ask
GBPUSD=X 1 27-Jul - 2007 2.0391 2.0391 2.0391 2.0392

1 USD = 0.4915 GBP are known as indirect quotation or quantity quotation and are used in British newspapers and are also common in Australia, New Zealand and Canada.