What is quote currency?

In a forex pair, this is the second one listed. Also known as the counter currency.

By selling the quote currency, a forex pair’s value mirrors how much it costs to acquire one unit of the currency base.

GBP/USD is the pair listed; USD is the quote currency.

EUR/CHF and CHF are quote currencies.

The standard used to measure the value of a base currency is called a quote currency. Quote currency helps differentiate two currencies and tells how many units of it can be freely exchanged for a unit of the base currency. The global trade and Forex markets extensively use it.

For instance, in this example, one EUR is worth 1.25 USD. In most quoting conventions, The base currency is USD for transpiring market currencies: USD-BRL, USD-TRY, USD-RBL, etc.

In futures markets which are usually based in the United States, the quoted currency is always the U.S. Dollar.

Quote currency explained

Before digging in the definition of quote currency and its uses, First, we have to know and understand what a currency pair is. A currency pair represents a base currency and a quote currency. Then, one estimates the value of counter currency against the base currency. One example of a currency pair is EUR/USD. Here indicates that the base currency is EUR, and the counter is USD.

For more understanding, the direct base currency always means one unit. For example, A Chinese Exporter will measure the value of 1 CNY concerning UYU. Domestic money is the base, and foreign money is the counter is called a direct quote.

On the contrary, a foreign currency that is the base, and wherein the domestic currency is the counter currency, is called an indirect quote currency. Hence, if the exporter calculated how many units of CNY would equal 1 UYU, it would be an indirect quote currency.

OVERVIEW

Both base and quote currencies—currency pairs—are affected by numerous different factors. These include the monetary, economic activity, and fiscal policy executed by central banks and interest rates.

Euro and U.S Dollar, the major currencies, are most likely to be the base currency rather than becoming the quote currency in terms of currency pair, especially trading in exotic currencies.

Most generally traded currency pairs in the market are the ff: EUR/GBP, EUR/USD, GBP/USD, USD/CHF, USD/JPY

Indicated above, the base currency is the first currency in these pairings.

The second one is the quote currency. The pound is the base of money or one that is being purchased in the GBP/USD pair. The quote currency is the dollar. This one is being sold.

Thomas Harley