In the forex market, currency units are quoted as currency pairs. The base currency — also called 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. In forex, the base currency represents how much of the quote currency is needed for you to get one unit of the base currency.

The abbreviations used for currencies are prescribed by the International Organization for Standardization ISO. These codes are provided in standard ISO Currency pairs use these codes made of three letters to represent a particular currency. Currencies constituting a currency pair are sometimes separated with a slash character.

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The slash may be omitted or replaced by a period, a dash or nothing. The major currency codes include USD for the U. Here, XXX is the base currency and YYY is the quote currency. When provided with an exchange rate , currency pairs indicate how much of the quote currency is needed to buy one unit of the provided base currency.

The currency pair quotation is read in the same manner when selling the base currency. Forex quotations are stated as pairs because investors simultaneously buy and sell currencies.

Investors buy the pair if they think that the base currency will gain value in contrast with the quote currency. On the other hand, they sell the pair if they think that the base currency will lose value in contrast with the quote currency.

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What is a 'Base Currency' In the forex market, currency units are quoted as currency pairs. Simultaneous Movement Forex quotations are stated as pairs because investors simultaneously buy and sell currencies.

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