Base & Counter Currency

What is Base Currency?

Base Currency is the first currency quoted in a currency pair  of Forex . It is also called the transaction currency followed by the second part of quotation. It is the such currency which represents how much of the quoted currency a trader needs to get a unit of the Base currency. A  business firm may have used this currency as domestic currency making profits or losses.

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For example: EUR/USD is the currency pair where EUR is the Base currency and USD is the quote currency.

Now let us know what the Quote Currency.

Quote Currency is the second currency quoted in a currency pair of Forex. It is also called the counter or secondary currency. It can be divided as Direct and Indirect Quote currency. Direct quote is the foreign currency when Indirect quote is the domestic currency.

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For example: USD/JPY is the currency pair in forex in which JPY is the direct quote currency. Again EUR/USD is the currency pair in forex where USD is the indirect quote currency.

Here USD/JPY represents how many Japanese Yens are needed to get one us dollar while EUR/USD indicates how many US dollars are needed to get one EURO.