What is Base Currency?
In the forex market, currency unit prices are quoted as currency pairs. The base currency – the transaction currency - is the first currency appearing in a currency pair quotation, followed by the second part of the quotation, called the quote currency or the counter currency. For accounting purposes, a firm may use the base currency as the domestic currency or accounting currency to represent all profits and losses.
For example, if you were looking at the EUR/USD currency pair, the euro would be the base currency, and the U.S. dollar would be the quote currency.
In forex, currency pairs are written as XXX/YYY or simply XXXYYY.
Here, XXX is the base currency, and YYY is the quote currency.
EUR/USD and USD/CAD are two examples of this format.
The abbreviations used for currencies are prescribed by the International Organization for Standardization (ISO). These codes are provided in standard ISO 4217.
Currency pairs use these codes made of three letters to represent a particular currency.
Currencies showing a currency pair are usually separated with a slash character. The slash is sometimes removed, but it means the same thing.