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).

  1. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  2. Currency Pairs

    Two currencies with exchange rates that are traded in the retail ...
  3. Counter Currency

    The counter currency is the second currency in a quoted currency ...
  4. Currency Pair: EUR/USD (Euro/U.S. ...

    The Currency Pair EUR/USD is the abbreviation for the euro and ...
  5. Major Pairs

    Major pairs are the most traded foreign exchange currency pairs. ...
  6. Exchange Rate

    An exchange rate is the price of a nation’s currency in terms ...
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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 Answer >>
  2. Why is the U.S. dollar shown on the top of some currency pairs and on the bottom ...

    All currencies are traded in pairs. The first currency in the pair is called the base currency while the second is called ... Read Answer >>
  3. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

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  4. What is the value of one pip and why are they different between currency pairs?

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  5. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
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