Reciprocal Currency


DEFINITION of 'Reciprocal Currency'

In the foreign exchange market, a currency pair that involves the U.S. dollar (USD) but where the USD is not the base currency. For example, the currency pair NZD/USD has the New Zealand dollar as its base currency and the USD as its quote currency. A currency that is quoted as dollars per unit of currency instead of in units of currency per dollar.

BREAKING DOWN 'Reciprocal Currency'

Reciprocal currency describes currency pairs used in the foreign exchange market where the U.S. dollar (USD) and another currency are paired, but where the USD is not the first currency quoted. Major currency pairs that involve the USD but where the USD is not the base currency include EUR/USD (Euro and U.S. dollar); GBP/USD (British pound and U.S. dollar); and AUD/USD (Australian dollar and U.S. dollar).

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  1. Why isn't the EUR/USD currency pair quoted as USD/EUR?

    In a currency pair, the first currency in the pair is called the base currency and the second is called the quote currency. ... Read Full Answer >>
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  3. Where did the term 'pip' in currency exchange come from?

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