Base Currency / Quote Currency

Base Currency / Quote Currency Explanation

In a currency pair, the base currency is the first currency listed, and the quote currency (or counter currency) is the second. The price of the currency pair shows how much of the quote currency is needed to buy one unit of the base currency.

For example, in EUR/USD = 1.10, the EUR (euro) is the base currency, and the USD (US dollar) is the quote currency. This means 1 euro is worth 1.10 US dollars.

Base Currency / Quote Currency History

The concept of base and quote currencies became widely used when forex trading expanded globally. Initially, exchange rates were fixed under systems like the gold standard and the Bretton Woods Agreement, where currencies were pegged to gold or the US dollar. When the forex market adopted floating exchange rates in the 1970s, base and quote currency formats became standard to simplify trading.

Today, the US dollar (USD) is the most common base currency in global forex markets, but major currencies like the euro (EUR), British pound (GBP), and Japanese yen (JPY) are also widely used as base currencies.

Base Currency / Quote Currency Etymology

“Base” comes from the Latin basis, meaning “foundation” or “starting point.” In forex, the base currency is the starting value from which the exchange rate is calculated.

“Quote” comes from the Latin quotare, meaning “to state a price.” The quote currency determines how much is needed to buy one unit of the base currency.

What is base currency and quote currency CFA?

In West Africa, CFA francs (XOF or XAF) are used in some currency pairs. If trading EUR/XOF, the euro (EUR) is the base currency, and the West African CFA franc (XOF) is the quote currency, meaning the pair shows how many CFA francs are needed to buy 1 euro.

What is the base currency in an indirect quote?

In an indirect quote, the local currency is the base currency, and the foreign currency is the quote currency. For example, in Japan, an indirect quote for USD/JPY would be JPY/USD, meaning it shows how many US dollars 1 Japanese yen is worth.

What is the currency of quote?

The quote currency (or counter currency) is the second currency in a currency pair. It shows how much is needed to buy one unit of the base currency. For example, in GBP/USD = 1.30, the quote currency is USD, meaning 1 British pound is worth 1.30 US dollars.

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