Base Currency Definition – What is Base Currency? | CFI LB

base currency

In the foreign exchange markets, currency prices are displayed or quoted as currency pairs such as GBP/USD or EUR/USD. The base currency, sometimes known as the transaction currency, is the first currency displayed in the price quotation. The second currency displayed is known as the quote currency or sometimes, the counter currency.

 

Some examples:

 

  • GBP/USD 1.2420-1.2435 base/transaction currency is the British Pound & quote/counter currency is the US Dollar.
  • EUR/USD 1.1230-1.1233 base/transaction currency is the Euro & quote/counter currency is the US Dollar. 

 

Key takeaways:

 

  • Foreign exchange prices/quotations are always listed in pairs.
  • The base currency is the first currency listed and shows the amount of the quote currency required to purchase one unit of the base currency.
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