Identify the currency in which an FX price is expressed, calculate quote-currency marks, and separate quotation from settlement and reporting.
Quote currency
The quote currency, also called the counter currency, is the currency in which one unit of an FX pair's base currency is priced. It is the second currency in conventional market currency-pair notation. In EUR/USD, USD is the quote currency: a price of 1.20 means 1.20 US dollars per euro. That identifies the units of a euro holding's dollar valuation and of its price-driven gain or loss.
The role depends on the pair. In USD/JPY, the quote currency is JPY. A price quoted against dollars does not always have dollars as its quote currency. CME's quotation guide identifies the second currency as the quote or terms currency and cautions that spot and futures quotation conventions can differ.
The price's units survive the calculation
Take a fictional EUR/USD price of 1.20 USD per EUR and a cash holding of EUR 100. Its marked value is:
100EUR×1.20EURUSD=120USD.
EUR cancels; USD remains. The market label EUR/USD orders the currency names, whereas the dimensional price is USD per EUR. Treating the label as an algebraic fraction reverses the conversion.
Now suppose the illustrative price rises to 1.25 USD per EUR while the holding remains EUR 100. Its marked value becomes USD 125, an increase of USD 5. More generally, for a fixed cash quantity N in the base currency and price S in quote currency per unit of base:
Vquote=NS,ΔVquote=N(S1−S0).
Here the rate change is 0.05 USD per EUR, so the value change is USD 5. This calculation excludes interest, fees and trading costs. It describes a change in the holding's value; the investor has not necessarily sold the euros or received a dollar payment. A bare price change of “0.05” is incomplete until its currency units are supplied.
A fictional EUR/USD price moves from 1.20 to 1.25 USD per EUR. The same EUR 100 holding is marked at USD 120 and USD 125, a USD 5 increase without a sale.
Original synthetic cash-holding marks. The euro quantity stays fixed; the dollar price and dollar value change. Interest, spreads and fees are excluded.
For an actual conversion, the bid-ask spread also matters. A client buying the base pays quote currency at the dealer's ask; a client selling the base receives quote currency at the bid. A mark or reference rate alone does not specify executable cash proceeds. The FX lesson develops these two directions and cross-rate calculations. Its preview is public; the full lesson requires a signed-in free account.
Quotation, settlement and reporting answer different questions
Quote currency answers “in what currency is this price expressed?” Settlement currency answers “what currency is actually paid under this contract?” A deliverable spot conversion exchanges both currency legs on its agreed settlement date. A derivative may instead pay a net amount under separate terms: HKEX's NDF explanation, for example, describes settlement through a net convertible-currency payment rather than delivery of both underlying currencies. Read the confirmation or product specification for the payment currency, fixing and settlement date; the quotation role alone does not establish every derivative's settlement currency.
Reporting currency answers “in what currency is the account or portfolio presented?” An AUD-reporting investor can hold euros marked using EUR/USD. USD remains that pair's quote currency, and the account needs an additional conversion to express the value in AUD. IBKR's account-currency definition illustrates how statement translation is a separate account choice from the quotation roles in a traded pair.
For data work, retain the base currency, quote currency and explicit price units with each series. For a trade, retain the side, quantity currency and settlement terms too. A column called “price” cannot tell a valuation system whether its output should be dollars, yen or something else.
Hull, John C. (2018), Options, Futures, and Other Derivatives, 9th ed., Global Edition, Pearson, §1.3, pp. 28–29: explicit currency-price units, bid/offer amounts and currency commitments.
