Base Currency

The base currency is the first currency listed in a currency pair on a foreign exchange market. It is the currency against which the value of the second currency, known as the quote currency, is quoted.

For example, in the currency pair EUR/USD, the base currency is the Euro (EUR) and the quote currency is the US Dollar (USD). In this case, the value of the Euro is quoted in terms of the US Dollar, and the exchange rate indicates how much of the quote currency (US Dollars) is needed to buy one unit of the base currency (Euros).

The base currency is important because it is the currency in which the value of the trade is denominated. For example, if a trader buys EUR/USD at a price of 1.2000, this means that they are buying one Euro for 1.2000 US dollars. The base currency is also the currency in which the profit or loss from a trade is calculated.