What is Base Currency?

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The **Base Currency** is the first currency listed in a foreign exchange (FX) currency pair, representing the unit against which the second currency, the quote currency, is measured. It is the currency that is being bought or sold in a transaction, and its value is always implicitly one unit, meaning the exchange rate indicates how much of the quote currency is required to purchase one unit of the base currency.

Base Currency

What is Base Currency?

What is the significance of the Base Currency in FX trading and how does it affect transaction size and leverage calculations?

How does the convention of using the Base Currency relate to major currency pairs and global financial reporting standards?

Why is the Base Currency crucial for calculating profit and loss (P&L) and managing risk in hedging strategies?

When does a currency transition from a Quote Currency to a Base Currency, and what are the implications for cross-currency arbitrage?

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