ISO currency codes are the three-letter alphabetic codes that represent the various currencies used around the world. When combined in pairs, they form the symbols and cross rates applied in currency trading.
Each country-specific three-letter alphabetic code also has a corresponding three-digit numeric code. These codes are identified by the International Organization for Standardization (ISO), a nongovernmental organization that provides standards for manufacturing, commerce, technology, and communication. For currencies, the governing document is called ISO 4217:2015.
Key Insights
- ISO currency codes are three-letter alphabetic codes representing currencies used worldwide.
- The ISO standard committees established standardized currency codes in 1978.
- ISO currency codes designate the base and quote currencies in forex price quotes.
- ISO has also designated lesser-known numeric equivalents to the three-letter currency codes.
Understanding ISO Currency Codes
ISO currency codes are central to currency pairs, which are the quotation and pricing structures of the currencies traded in the forex market. The value of a currency is defined as a rate and is determined by its comparison with another currency.
The first three-letter code used in a currency pair quotation is called the base currency, and the second currency is known as the quote currency. The currency pair shows how much of the quote currency is required to purchase one unit of the base currency.
For example, EUR/USD is the quote for the euro against the U.S. dollar. EUR is the three-letter ISO currency code for the euro, and USD is the code for the U.S. dollar. A quoted price of 1.2500 means that one euro is exchanged for 1.2500 U.S. dollars. In this case, EUR is the base currency and USD is the quote currency. This implies that one euro can be exchanged for 1.25 U.S. dollars.
ISO became involved in currency transactions in 1973 when it decided it would be beneficial to create standard codes for currencies. After five years of collaboration, the first standardized currency codes were published in 1978.
Special Considerations
According to ISO 4217:2015, “ISO specifies the structure for a three-letter alphabetic code and an equivalent three-digit numeric code for the representation of currencies.” It also shows the decimal relationship between minor units and the main currency. For instance, the three-digit numeric code for the U.S. dollar is 840, and the numeric code for the euro is 978. However, currencies are rarely quoted using these numeric codes (978/840).
ISO 4217:2015 is designed for use in any application of trade, commerce, and banking where currencies need to be described. It is useful for both manual users and automated systems, making it versatile for any trading or order processing algorithm that might require numeric codes for efficient processing.
Major Currency Codes
The ISO database provides a comprehensive list of currency codes in XML and other formats. All major currency pairs have very liquid markets that operate round-the-clock on business days, with very narrow spreads.
The major currency pairs are:
- EUR/USD - Euro / U.S. Dollar
- GBP/USD - British Pound / U.S. Dollar
- USD/JPY - U.S. Dollar / Japanese Yen
- USD/CHF - U.S. Dollar / Swiss Franc
The value traded against the U.S. dollar is a key criterion for classification as a major currency pair.
Other important currencies include:
- AUD – Australian Dollar
- CAD – Canadian Dollar
- CNY – China Yuan Renminbi
- NZD – New Zealand Dollar
- INR – Indian Rupee
- BRL – Brazilian Real
- SEK – Swedish Krona
- ZAR – South African Rand
- HKD – Hong Kong Dollar
Related Terms: currency pairs, forex market, base currency, quote currency, ISO standards.
