Real exchange rate and quote structure

[wawa]

Suppose the exchange rate is quoted as FCC (same as DC/FC).
Then the equation for the real exchange rate
Real S(DC/FC) = S(DC/FC) * ( P(FC) / P(DC) )
That is to say, in other circumstances you follow the DC/FC convention for putting the rates into the formula, but here it is inverted, the FC on top and the DC in the denominator.
Why is it inverted? I don’t get it.

 

[maxmeomeo]

Because they don’t use inflation rate or interest rate but Purchasing power index, therefore it goes that way. You gotta be careful in this formula

 

[wawa]

OK; it’s something you memorize by heart. I get it.

 

[Dreary]

Why not think about it like the following?
NOM$/Y = REAL$/Y * (1+P$)/(1+PY)
You agree with that? The nominal rate is always real * inflation. Notice that $ on top and Yen on bottom throughout.
What’s the real rate?
REAL$/Y = NOM$/Y / (1+P$)/(1+PY)
………… = NOM$/Y * (1+Py)/(1+P$)