Table of Contents
- What Is an ISO Currency Code?
- Key Takeaways
- Understanding ISO Currency Codes
- ISO Alphabetic Codes vs. Numeric Codes
- Major Currency Codes
- Important Note on Classification
- What Are Currency Codes in Forex?
- What Are the Top Traded Currencies?
- What Are SWIFT Currency Codes?
- What Is the Currency Code for the USA?
- What Is the Currency Code for the UK?
- The Bottom Line
What Is an ISO Currency Code?
Let me explain ISO currency codes directly: they're three-letter alphabetic codes that stand for the different currencies used around the world. When you pair them up, they create the symbols and cross rates you see in currency trading.
Each of these country-specific three-letter codes comes with a matching three-digit numeric code. The International Organization for Standardization (ISO), a nongovernmental body that sets standards for manufacturing, commerce, technology, and communication, identifies these codes. For currencies, the key document is ISO 4217:2015.
Key Takeaways
You need to know that ISO currency codes are those three-letter alphabetic codes representing global currencies. The ISO standard committees set up these standardized codes back in 1978. In forex price quotes, these codes designate the base and quote currencies. Plus, ISO has assigned lesser-known numeric equivalents to these three-letter codes.
Understanding ISO Currency Codes
ISO currency codes are essential to currency pairs, which form the quotation and pricing structures in the forex market. A currency's value is a rate determined by comparing it to another currency.
In a currency pair quotation, the first three-letter code is the base currency, and the second is the quote currency. The pair shows how much of the quote currency you need to buy one unit of the base currency.
Take EUR/USD as an example: that's the quote for the euro against the U.S. dollar. EUR is the ISO code for the euro, USD for the U.S. dollar. If the price is 1.2500, it means one euro exchanges for 1.25 U.S. dollars, with EUR as the base and USD as the quote. Put another way, you'd spend $125 to get €100.
ISO didn't get involved in currency transactions until 1973, when they decided it would be useful. After five years of work, the first standardized codes came out in 1978, along with rules on how they should change.
ISO Alphabetic Codes vs. Numeric Codes
Under ISO 4217:2015, you'll find the three-letter alphabetic codes used globally for currency exchanges, plus equivalent three-digit numeric codes for each. For instance, the U.S. dollar's numeric code is 840, and the euro's is 978.
You won't usually see currencies quoted with numbers like 978/840. Forex markets stick to the three-letter codes for pairs. But these codes work for both manual and automated systems.
In scenarios like algorithmic trades or orders, numeric codes can be easier and allow for better processing.
Major Currency Codes
You can find a complete list of currency codes on the ISO website in XML and XMS formats. All major currency pairs have very liquid markets trading 24 hours a day on business days, with narrow spreads.
The major currency pairs are:
- EUR/USD - Euro / U.S. dollar
- GBP/USD - Great Britain pound (sterling) / U.S. dollar
- USD/JPY - U.S. dollar / Japanese yen
- USD/CHF - U.S. dollar / Swiss Franc
Important Note on Classification
Classification as a major pair depends on value traded against the U.S. dollar.
Other important currencies include:
- AUD - Australian dollar
- CAD - Canadian dollar
- CNY - China yuan renminbi
- NZD - New Zealand dollar
- INR - Indian rupee
- BZR - Brazilian real
- SEK - Swedish krona
- ZAR - South African rand
- HKD - Hong Kong dollar
What Are Currency Codes in Forex?
In forex markets, currency codes are the three-letter identifiers for traded currency pairs. For example, USD/CHF is the U.S. dollar and Swiss franc pair. ISO establishes these codes, and they're used worldwide.
What Are the Top Traded Currencies?
Based on the latest Bank for International Settlements data, eight currencies dominate global forex trades: U.S. dollar (USD), euro (EUR), Japanese yen (JPY), British pound (GBP), Chinese yuan renminbi (CNY), Australian dollar (AUD), Canadian dollar (CAD), and Swiss franc (CHF).
What Are SWIFT Currency Codes?
SWIFT currency codes match ISO currency codes. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications. Since ISO codes appear in SWIFT messages, people often call them SWIFT codes.
What Is the Currency Code for the USA?
The code for the United States dollar is USD. Its symbol is $. Sometimes it's written as US$ to differentiate from other dollar currencies.
What Is the Currency Code for the UK?
The code for the British pound sterling is GBP. Its symbol is £.
The Bottom Line
ISO currency codes are three-letter codes representing world currencies for financial transactions and forex markets. Each has a numeric counterpart, though it's less common. Established in 1978, these codes are also known as SWIFT codes due to their use in interbank telecoms. In currency exchanges, especially forex, they specify base and quote currencies.
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