Answer by Dave Hughe:
An exchange rate is the value of one currency converted into another.
In an exchange rate, there are always two components: a base currency and a counter currency.
An exchange rate can be quoted directly, when the foreign currency is the base currency and the domestic currency is the counter currency and indirectly, when the domestic currency is the base currency and the foreign currency is the counter currency.
For example, a direct quotation for the US dollar in Canada would be US$1 = CAN$1.0893. In this quotation, the US dollar is the base currency and is the Canadian dollar is the counter currency.