Why is the forex pair Japanese yen and USD is displayed as USD/JPY but not JPY/USD
Why is the forex pair Japanese yen and USD is displayed as USD/JPY but not JPY/USD
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Asmodean · External communityPost link
External question — Personal Finance Stack Exchange
Author: Asmodean
Original post: https://money.stackexchange.com/questions/146448
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Assume the trader's assets are in USD.
The first currency is base, which is bought after selling the quote.
Like EUR/USD. If my understanding is correct, wouldn't that be selling my USD in order to buy EUR and hope it will increase in value for profit?
So why is the JPY and USD pair displayed as USD/JPY? Wouldn't that mean I am selling JPY which I don't have for USD?
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D Stanley · External communityPost link
External answer — Personal Finance Stack Exchange
Author: D Stanley
Original post: https://money.stackexchange.com/a/146449
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
It's just a
convention
:
Currency Pair Quotation Conventions
The base currency in a particular currency pair are often determined
by their importance in relation to other currencies.
For example, the Euro is generally considered the most dominant base
currency, followed by the Pound Sterling, the Australian Dollar and
the New Zealand Dollar. All of these serve as the base currency in
their currency pairs involving the U.S. Dollar, and they would be
written in currency codes like this: EUR/USD.
The U.S. Dollar then dominates as the base currency in virtually all
other currency pairs, including against the Japanese Yen, the Canadian
Dollar, and the Swiss Franc, as well as in currency pairs against the
exotic currencies. These currency pairs would generally be written
like this: USD/JPY.
So a USD/JPY quote means "buying USD in JPY", meaning you are paying an equivalent amount of JPY to get USD.
If you want to trade the other way around, meaning you want to pay USD and get JPY, just invert the FX rate, so a rate of 20 becomes 0.05. Note that you should also invert the bid/ask, meaning you would invert the USD/JPY
bid
if you are looking to buy JPY with USD.
If you get confused about the bid/ask, remember that you always pay the higher amount and sell for the lower amount.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: D Stanley Source score (net votes, not local likes): 2 Original post: https://money.stackexchange.com/a/146449 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. It's just a convention : Currency Pair Quotation Conventions The base currency in a particular currency pair are often determined by their importance in relation to other currencies. For example, the Euro is generally considered the most dominant base currency, followed by the Pound Sterling, the Australian Dollar and the New Zealand Dollar. All of these serve as the base currency in their currency pairs involving the U.S. Dollar, and they would be written in currency codes like this: EUR/USD. The U.S. Dollar then dominates as the base currency in virtually all other currency pairs, including against the Japanese Yen, the Canadian Dollar, and the Swiss Franc, as well as in currency pairs against the exotic currencies. These currency pairs would generally be written like this: USD/JPY. So a USD/JPY quote means "buying USD in JPY", meaning you are paying an equivalent amount of JPY to get USD. If you want to trade the other way around, meaning you want to pay USD and get JPY, just invert the FX rate, so a rate of 20 becomes 0.05. Note that you should also invert the bid/ask, meaning you would invert the USD/JPY bid if you are looking to buy JPY with USD. If you get confused about the bid/ask, remember that you always pay the higher amount and sell for the lower amount.
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