What is an ISO Currency Code
ISO currency codes are three-letter alphabetic codes that represent the various currencies used throughout the world. When combined in pairs, they make up the symbols and cross rates used in currency trading.
Each of the country-specific three-letter alphabetic codes have a corresponding three-digit numeric code. For example, the three-digit numeric code for the U.S. dollar (USD) is 840.
The International Organization for Standardization (ISO) provides standards for businesses, governments, and societies. For currencies, the governing document is called ISO 4217:2015.
BREAKING DOWN ISO Currency Code
ISO currency codes are central to currency pairs, which are the quotation and pricing structures of the currencies traded in the forex market. The value of a currency is a rate and is determined by its comparison to another currency. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency. The currency pair indicates how much of the quote currency is needed to purchase one unit of the base currency.
For example, EUR/USD is the quote for the euro against the U.S. dollar. A quote or price of 1.2500 means that one euro is exchanged for 1.2500 U.S. dollars. In this case, EUR is the base currency and USD is the quote currency (counter currency). This means that 1 euro can be exchanged for 1.25 U.S. dollars. Another way of looking at this is that it will cost you $125 to buy EUR 100.
According to the ISO website, "ISO 4217:2015 specifies the structure for a three-letter alphabetic code and an equivalent three-digit numeric code for the representation of currencies. For those currencies having minor units, it also shows the decimal relationship between such units and the currency itself."
Continuing: "ISO 4217:2015 is intended for use in any application of trade, commerce and banking, where currencies and, where appropriate, funds are required to be described. It is designed to be equally suitable for manual users and for those employing automated systems"
Basically, the world came together to create standards to facilitate commerce and transfers of money. Traders, especially in the currency or forex markets, depend on these codes to represent exchange rates between any two specific countries.
Major Currency Codes
The ISO website offers a complete list of currency codes in XML and XMS formats. See https://www.currency-iso.org/en/home/tables/table-a1.html
All of the major currency pairs have very liquid markets that trade 24 hours a day every business day, and they have very narrow spreads. Value traded vs. the U.S. Dollar is the top criteria for classification as major currency pairs, as follows:
- EUR/USD - euro / U.S. dollar
- GBP/USD - Great Britain pound (sterling) / U.S. dollar (nicknamed cable)
- USD/JPY - U.S. dollar / Japanese yen
- USD/CHF - U.S. dollar / Swiss Franc (nicknamed Swissie)
- AUD/USD - Australian dollar / U.S. dollar (nicknamed Aussie)
- USD/CAD - U.S. dollar / Canadian dollar (nicknamed loonie)
Other important currencies include: