ABSTRACT
The examination of the way foreign currency balances are built up showed that rates of exchange depend on the price of bills. The difficulty in reading exchange rates is that the prices of currencies are not quoted in the same way as other prices. The rule is that where the exchange is quoted in terms of foreign currency to the pound the high rate is favourable to sterling; where it is quoted in terms of pence per foreign unit, a low rate is favourable to sterling. The actual work of buying and selling currencies in a bank is performed by the exchange trader, who is usually "second man" in the foreign department, i.e. second-in-command to the manager of the foreign department.
