Term

Base currency

A Wealth of Knowledge

A base currency is the first currency on the left-hand side on the currency conversion table. Normally the currencies are traded in pairs, so the first currency on the left-hand side is always the base currency. For instance, EUR/USD, the EUR is the base currency and the USD is a quote currency. So when one is buying the EUR/USD they are buying the EUR to be exact and selling the USD simultaneously. By so doing one is betting that the EUR will be stronger than the USD. However when one sells the EUR/USD, they are betting that the EUR will weaker than the USD.

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