Counter Currency
Counter currency is a term used in the financial markets to refer to a currency that is traded against another currency in a currency pair. For example, when trading the EUR/USD currency pair, the Euro is the base currency and the US Dollar is the counter currency. The counter currency is also known as the quote currency or the secondary currency.
History of Counter Currency
The concept of counter currency has been around since the early days of currency trading. In the past, traders would use a variety of methods to determine the value of a currency pair. This included looking at the relative strength of the two currencies, the amount of money being exchanged, and the overall economic conditions of the countries involved. As technology improved, the concept of counter currency became more widely accepted and used in the financial markets.
Today, counter currency is used in a variety of ways. It is used to determine the value of a currency pair, to hedge against currency risk, and to speculate on the direction of a currency pair. It is also used to determine the cost of a transaction when trading in the foreign exchange market.
Comparison Table
| Base Currency | Counter Currency |
|---|---|
| EUR/USD | US Dollar |
| GBP/USD | US Dollar |
| USD/JPY | Japanese Yen |
| AUD/USD | US Dollar |
Summary
Counter currency is an important concept in the financial markets. It is used to determine the value of a currency pair, to hedge against currency risk, and to speculate on the direction of a currency pair. More information about counter currency can be found on websites such as Investopedia and Bloomberg.
See Also
- Base Currency
- Currency Pair
- Currency Risk
- Foreign Exchange Market
- Hedging
- Speculation
- Investopedia
- Bloomberg
- Relative Strength
- Economic Conditions
