Reciprocal Currency

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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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RELATED FAQS
  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 >>
  2. How is the value of a pip determined?

    A pip in foreign exchange trading is a measure of a price movement in a currency pair. "Pip" is an acronym for price interest ... Read Full Answer >>
  3. Where did the term 'pip' in currency exchange come from?

    The term pip is an acronym for percentage in point or price interest point. It measures a unit of change within a pair of ... Read Full Answer >>
  4. What is the difference between pips, points, and ticks?

    Point, tick and pip are terms used to describe price changes in the stock market and other markets. While traders and analysts ... Read Full Answer >>
  5. How do I use STIX Oscillator to create a forex trading strategy?

    The STIX oscillator can be applied to forex trading by signalling when to buy when a currency is in an oversold condition ... Read Full Answer >>
  6. What are the nations with the lowest PPP (purchasing power parity) with respect to ...

    Purchasing power parity (PPP) is one of several economic indicators used to compare how much goods cost from country to country. ... Read Full Answer >>

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