What is Quote Currency?

The quote currency is the second currency listed in a forex pair. It is also known as the counter currency.

The price of a forex pair reflects how much it costs to purchase one unit of the base currency by selling the quote currency.

In a pair listed as GBP/USD, USD is the quote currency. In EUR/CHF, CHF is the quote currency. The first currency listed is the base currency; GBP and EUR would be the respective base currencies for the above examples.

About Quote Currency

Understanding the quotation and pricing structure of currencies is essential for anyone wanting to trade currencies in the forex market. Market makers tend to trade specific currency pairs in set ways, either direct or indirect, which means understanding the quote currency is paramount.

A currency pair's exchange rate reflects how much of the quote currency is needed to be sold/bought to buy/sell one unit of the base currency. As the pace in a currency pair increases, the value of the quote currency falls, whether the pair is direct or indirect.

For example, the cross rate between the U.S. dollar and the Canadian dollar is denoted as USD/CAD and is a direct quote. This means that the CAD is the quote currency, while the USD is the base currency. The CAD is used as a reference to determine the value of one USD. From a U.S.-centric point of view, the CAD is the foreign currency.