How are foreign currencies quoted and priced

How are foreign currencies quoted and priced

Currencies are designated by
three letter symbols.The standard
symbols for some of the most
commonly traded currencies are:
EUR – Euros
USD – United States dollar
CAD – Canadian dollar
GBP – British pound
JPY – Japanese yen
AUD – Australian dollar
CHF – Swiss franc
Forex transactions are quoted
in pairs because you are buying
one currency while selling
another.The first currency is the
base currency and the second
currency is the quote currency.
The price, or rate, that is quoted
is the amount of the second currency
required to purchase one


unit of the first currency. For
example, if EUR/USD has an ask
price of 1.2178, you can buy one
Euro for 1.2178 US dollars.
Currency pairs are often
quoted as bid-ask spreads. The
first part of the quote is the
amount of the quote currency
you will receive in exchange for
one unit of the base currency
(the bid price) and the second
part of the quote is the amount of
the quote currency you must
spend for one unit of the base
currency (the ask or offer price).
In other words,a EUR/USD spread
of 1.2170/1.2178 means that you
can sell one Euro for $1.2170 and
buy one Euro for $1.2178.
A dealer may not quote the
full exchange rate for both sides
of the spread. For example, the
EUR/USD spread discussed
above could be quoted as
1.2170/78.The customer should
understand that the first three
numbers are the same for both