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What Are ISO Currency Codes?
ISO currency codes are unique three-letter alphabetic representations assigned to different currencies worldwide. These codes play a crucial role in symbolizing currencies and determining exchange rates in the global market.
Each three-letter code corresponds to a three-digit numeric code, established by the International Organization for Standardization (ISO). ISO, known for setting standards across various sectors, including manufacturing and technology, maintains these currency codes in a document named ISO 4217:2015.
### Key Takeaways
– ISO currency codes represent currencies across the world.
– ISO introduced standardized currency codes in 1978.
– These codes identify base and quote currencies in forex trading.
– ISO also assigns numeric values to the alpha currency codes.
Understanding ISO Currency Codes
ISO currency codes are essential in defining currency pairs used in forex trading. The value of a currency is determined by comparing it to another currency in a pair.
In a currency pair, the first three-digit code denotes the base currency, while the second code represents the quote currency. This pairing indicates the amount of quote currency required to buy one unit of the base currency.
For instance, in EUR/USD, EUR is the ISO code for the euro, and USD is for the U.S. dollar. A quote of 1.2500 for this pair means one euro equals 1.2500 U.S. dollars. Therefore, spending USD $125 will buy EUR 100.
ISO’s involvement in currency transactions began in 1973, leading to the standardization of currency codes in 1978 after years of collaboration.
Special Considerations
ISO 4217:2015 outlines the structure of alpha and numeric currency codes, including minor units and their relation to the currency. Numeric codes like 840 for the U.S. dollar and 978 for the euro are used for system applications, as opposed to actual trading quotes.
This standard is designed for trade, commerce, and banking applications, suitable for both manual and automated systems. Numeric codes can enhance processing efficiency for trading and order management algorithms.
Major Currency Codes
Major currency pairs traded 24/7 with narrow spreads are listed on the ISO website, facilitating liquid markets.
Some major currency pairs include:
- EUR/USD – Euro/U.S. Dollar
- GBP/USD – British Pound/U.S. Dollar
- USD/JPY – U.S. Dollar/Japanese Yen
- USD/CHF – U.S. Dollar/Swiss Franc
Classification as a major currency pair is based on traded value against the U.S. dollar.
Other significant currencies include:
- AUD – Australian Dollar
- CAD – Canadian Dollar
- CNY – Chinese Yuan Renminbi
- NZD – New Zealand Dollar
- INR – Indian Rupee
- BZR – Brazilian Real
- SEK – Swedish Krona
- ZAR – South African Rand
- HKD – Hong Kong Dollar
