Base currency

The rules for formulating standard currency pair notations result from accepted priorities attributed to each currency.

From its inception in 1999 and as stipulated by the European Central Bank, the euro has first precedence as a base currency. Therefore, all currency pairs involving it should use it as their base, listed first. For example, the US dollar and euro exchange rate is identified as EUR/USD.

Although there is no standards setting body or ruling organization, the established priority ranking of the major currencies is:

• Euro
• Pound sterling
• Australian dollar
• New Zealand dollar
• United States dollar
• Canadian dollar
• Swiss franc
• Japanese Yen

Historically, this was established by a ranking according to the relative values of the currencies with respect to each other , but the introduction of the euro and other market factors have broken the original price rankings.

Other currencies (the Minors) are generally quoted against one of the major currencies. These pairs are also referred to as currency crosses, or simply crosses. The most common crosses are EUR, JPY, and GBP crosses.

The term base currency in the foreign exchange field is also used as the accounting currency by banks, and is usually the domestic currency. For example, a British bank may use GBP as a base currency for accounting, because all profits and losses are converted to the sterling. If a EUR/USD position is closed out with a profit in USD by a British bank, then the rate-to-base will be expressed as a GBP/USD rate. This ambiguity leads many market participants to use the expressions currency 1 (CCY1) and currency 2 (CCY2), where one unit of CCY1 equals the quoted number of units of CCY2.

Most traded currencies by value
Currency distribution of global foreign exchange market turnover

Rank	Currency	ISO 4217 code (Symbol)	% daily share (April 2010)
1	United States dollar	USD ($)	84.9%
2	Euro	EUR (€)	39.1%
3	Japanese yen	JPY (¥)	19.0%
4	Pound sterling	GBP (£)	12.9%
5	Australian dollar	AUD ($)	7.6%
6	Swiss franc	CHF (Fr)	6.4%
7	Canadian dollar	CAD ($)	5.3%
8	Hong Kong dollar	HKD ($)	2.4%
9	Swedish krona	SEK (kr)	2.2%
10	New Zealand dollar	NZD ($)	1.6%
11	South Korean won	KRW (₩)	1.5%
12	Singapore dollar	SGD ($)	1.4%
13	Norwegian krone	NOK (kr)	1.3%
14	Mexican peso	MXN ($)	1.3%
15	Indian rupee	INR ()	0.9%
Other			12.2%
Total			200%

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