Right Hand Side - RHS

DEFINITION of 'Right Hand Side - RHS'

The term right hand side refers to the ask or offer price of a foreign exchange rate. A quote for foreign exchange appears as two prices (known as the bid/ask spread); for example, 1.2500 / 1.2505. The right hand side, in this case 1.2505, represents the available offer price for the base currency or the bid rate for the quoted currency.

BREAKING DOWN 'Right Hand Side - RHS'

The right hand side (RHS) is, literally, the right-hand side of the foreign exchange price quote. This is the price that the market is willing to sell a currency pair and the price that traders buy in. The size of the bid/ask spread is an indicator of the current liquidity in a market. A tight spread means there is good liquidity and helps cut down on losses. Forex brokers typically make money off of the bid/ask spread; the difference between the bid and the ask price is the profit on the transaction.

For example if the EUR/USD currency pair is trading at 1.1550 / 1.1560 the RHS or offer price is 1.1560. This is where a market maker is willing to sell EUR and buy USD or where an aggressor - or price taker - can buy EUR and sell USD. 

The currency pair EUR/USD is an indirect currency pair meaning the domestic currency, the EUR, is located on the left hand side therefore it is the base currency. Given the above example, it costs $1.156 U.S. dollars to buy a single euro. Some currency pairs that are quoted directly are USD/CAD and USD/JPY.