In FX quotes, what is the base currency assumed to be?

• A. It varies by quote
• B. The second quoted currency
• C. The first quoted currency
• D. One unit

Answer: (D)

In FX quotes, the price is stated as how much of the counter currency is needed to buy one unit of the base currency. So the base currency is assumed to be one unit. This is why the base currency is the first currency in the pair (for example, in EURUSD the base is EUR): the quoted number shows how many US dollars you need to buy 1 euro. If you see GBPJPY = 150.25, that means 1 GBP costs 150.25 JPY. The second currency is the counter/quote currency, not the base, and the quote is always per one unit of the base.