Important Key Terms
Below is a short list of some of the important terms pertinent to foreign currency exchange.
- Currency Codes: These are three-letter codes that represent specific currencies. For example, USD stands for the US Dollar, and EUR represents the Euro.
- Currency Pair: In foreign exchange (FX) quotations, a currency pair consists of two currencies. For instance, USD/EUR represents the exchange rate between the US Dollar and the Euro.
- Base Currency: The first currency listed in a currency pair. Its value is always 1 unit of that currency. For example, in USD/EUR, the US Dollar (USD) is the base currency.
- Quote Currency: The second currency listed in a currency pair. It indicates how much of the quote currency is needed to buy one unit of the base currency. In USD/EUR, the Euro (EUR) is the quoted currency.
- Exchange Rate: This is the value of one currency expressed in terms of another. It determines how much of one currency you’ll get in exchange for another.
- Bid vs. Ask: The bid price is what buyers are willing to pay for a currency, while the ask price is what sellers are asking for it. The difference between these two prices is called the spread.
- Spot Rate/Trade: The current market rate for immediate currency exchange. It’s the rate at which currencies are traded instantly.
Currency Converter
This currency converter allows you to check the latest average bid/ask rates for major world currencies. Our rates are sourced from leading market data contributors.
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