What does an ISO Currency code mean?
ISO currency code is the three-letter phonetic code for different world currencies. They are used to trade currencies and are put together in pairs to make marks and cross rates.
A three-digit number code goes with each of the three-letter phonetic codes for each country. The International group for Standardization (ISO) came up with these codes. ISO is a nongovernmental group that sets business, technology, communication, and manufacturing standards. The text that sets rules for currencies is called ISO 4217:2015.
How to Read ISO Currency Codes
Currency pairs, which show quotes and prices for different currencies sold on the foreign exchange market, are based on ISO currency codes. When you compare one coin to another, you get its rate, which shows how much it is worth.
A currency pair quotation starts with a three-digit number for one currency. This currency is called the “base currency,” and the second is called the “quote currency.” The currency pair shows the amount of the quote currency needed to buy one unit of the base currency.
A price for the euro against the U.S. dollar would be EUR/USD. This is the three-letter ISO code for the euro. This is the code for the U.S. dollar. If the price for this pair is given as 1.2500 USD, it means that one euro is worth 1.2500 USD. This is because EUR is the base currency, and USD is the reference currency, also called the counter currency. In other words, you can trade 1 euro for 1.25 US dollars. You can also think of this as USD 125 spent to buy EUR 100.
ISO didn’t deal with money until 1973 when the group that sets standards thought it would be a good idea to do so. After five years of work and discussion, the first uniform currency codes came out in 1978. They included rules for how they should change.
Unique Things to Think About
“ISO 4217:2015 specifies the structure for a three-letter alphabetic code and an equivalent three-digit numeric code for the representation of currencies,” says the ISO website. If the currency has minor units, it also shows how those units relate to the currency in decimals. The three-digit number code for the U.S. dollar is 840, and the three-digit number code for the euro is 978. But numbers like this (978/840) would not be used to quote currencies.
But, as the ISO document says, “ISO 4217:2015 is meant to be used in any trade, commerce, or banking application where currencies and, where necessary, funds need to be described.” It’s made to work just as well for people who use automatic and manual systems. Trading or order processing programs could use numeric codes to speed up processing if it would be helpful.
Major Codes for Money
A complete list of currency codes on the ISO website is available in XML and XMS forms. There are very few spreads on all major currency pairs, and they all trade 24 hours a day, every working day.
These are the main currency pairs:
- It stands for “euro to U.S. dollar.”
- GBP/USD stands for “Great Britain pound” or “sterling” and “U.S-dollar.”
- USD/JPY stands for “U.S. dollar / Japanese yen.”
- The U.S. dollar and the Swiss franc are written as USD/CHF.
- Determining which pairs of currencies are important is how much they are traded against the U.S. dollar.
These are some other essential currencies:
- The Australian dollar (AUD)
- The Canadian dollar, or CAD
- Chinese yuan, also written as CNY
- The New Zealand dollar (NZD)
- The Indian rupee (INR)
- The Brazilian real (BZR)
- The Swedish krona (SEK)
- ZAR stands for “South African rand.”
- The Hong Kong dollar (HKD)
Conclusion
- Three-letter phonetic codes called ISO currency codes stand for the different currencies used worldwide.
- In 1978, the ISO standard groups set up standardized codes for currencies.
- In forex price quotes, the base currency and the reference currency are shown by ISO currency codes.
- ISO has also developed less well-known numbers that are the same as the three-letter currency codes.
