A currency pair names two currencies using their three-letter codes. The first is the base currency and the second is the quote currency, and the rate states how many units of the quote currency one unit of the base buys. The codes come from ISO 4217, maintained by SIX on behalf of the International Organization for Standardization. Which currency goes first is market convention, not a rule, and institutions differ.
A currency pair looks like a code and reads like an equation. Once the convention is clear it is genuinely simple, and most of the confusion comes from one fact that is rarely stated: the order the two currencies appear in is a convention, not a rule, and different institutions use different ones.
Where the letters come from
The three-letter codes are defined by ISO 4217, an international standard. The Maintenance Agency for that standard is SIX, which acts on behalf of the International Organization for Standardization and its Swiss member body, and describes itself as the only recognised, authoritative source on currency code designations.
SIX publishes the codes as three lists, free of charge: current currencies, fund codes, and historical currencies and funds. Amendments are issued with effective dates and published change logs. A currency change is therefore a dated administrative event with a published record, not something that simply happens.
The construction is mostly systematic. The first two letters are usually the country code from ISO 3166 and the third is usually the initial of the currency's name. SIX gives the Swiss franc as the example: CH for Switzerland, plus F for franc. Each currency also carries a three-digit numeric code, ideally matching the country's numeric code, so the United States dollar is 840.
The exceptions are real and SIX names some of them. The euro does not follow the country-letter rule because it has no single country. SIX also notes many deviations across Central and South America, attributing them to the frequency with which currencies there have been reintroduced.
Base and quote
In a pair, the first currency is the base and the second is the quote. The rate says how many units of the quote currency one unit of the base currency buys.
That is the whole rule, and everything else follows from it. If the number rises, one unit of the base buys more of the quote, so the base has strengthened relative to the quote. If it falls, the base has weakened. Whatever the number does, it is describing the base currency, measured in the quote currency, in the same way a price tag describes one item measured in money.
The quote currency also sets the units of the answer. Pricing the same currency against the yen, the euro and the United States dollar gives three different numbers describing three different relationships, even though the currency being priced has not changed.
The ordering is genuinely just convention
This is the part worth stating plainly, because it is usually skipped.
The European Central Bank quotes all of its reference rates with the euro as the base currency, expressed as units of another currency per one euro. That is a documented institutional convention, applied consistently.
The Bank for International Settlements, in its statistical tables, places the United States dollar first, writing pairs in a form that reverses how several of them are conventionally quoted in the market. Its reason is that the dollar is the vehicle currency and putting it first makes the tables consistent.
Market convention, meanwhile, differs from both for particular pairs, generally placing the euro, sterling and the Australian and New Zealand dollars ahead of the United States dollar while placing the dollar ahead of the yen and the Swiss franc.
Three respectable conventions, and they disagree. There is no arbitration, because there is nothing to arbitrate: the same rate written either way round carries identical information, and converting between the two forms is a matter of taking the reciprocal, one divided by the number. What matters is knowing which convention you are reading, not which one is correct.
Majors, crosses, and an honest admission
The terms majors and crosses are used constantly and defined almost nowhere. No standards body publishes a list, and no central bank defines either term.
What can be said with a source is what the turnover data shows. The Bank for International Settlements observes that the ten most traded currency pairs all involve the United States dollar, which it attributes to the dollar's status as the world's vehicle currency. On the 2025 survey's preliminary figures the United States dollar was on one side of 89.2 per cent of all transactions. Because two currencies are involved in every trade, all currency shares in that survey sum to 200 per cent rather than 100, which is worth knowing before the percentages look wrong.
The largest pair not involving the United States dollar was the euro against sterling, at 1.8 per cent of turnover. The largest pair overall was the euro against the dollar at 21.2 per cent. So the biggest non-dollar pair in the world is roughly one-twelfth the size of the biggest dollar pair.
That is what the labels are gesturing at. Majors, in practice, means the handful of dollar pairs that dominate volume; a cross means a pair that skips the dollar. Neither term has an official boundary, and treating them as though they do is a mistake.
How a cross rate is actually built
Because most currencies are quoted against the United States dollar and comparatively few are quoted directly against each other, a rate between two non-dollar currencies is usually calculated rather than observed. The result is a cross rate.
The arithmetic is straightforward. If one unit of currency A buys a certain quantity of United States dollars, and one United States dollar buys a certain quantity of currency B, then multiplying the two gives what one unit of A buys in B. The Reserve Bank of Australia sets out that its rates for most currencies are calculated by crossing the United States dollar rate with observed midpoints of buying and selling rates quoted at around the same time. Even a central bank publishing its national currency's rates derives most of them through the dollar rather than observing them directly.
This is why the dollar is called a vehicle currency. It is not that it is involved in every economic relationship; it is that it is the currency through which the price of most relationships is carried.
Heavily traded crosses behave like directly quoted pairs, because enough participants trade them in their own right to keep the derived and traded prices in line. Thinner ones are more visibly a calculation.
The Australian case
The Australian dollar accounted for 6.1 per cent of global turnover in April 2025, making it the seventh most traded currency, down from sixth in 2022. Its pair against the United States dollar is the sixth most traded pair globally at around 5 per cent of all transactions.
Almost every other Australian dollar pair is a cross. The euro, the yen, sterling and the currencies of the major remittance destinations all reach the Australian dollar through triangulation rather than through a directly quoted market.
Where to look next
- Currency pair - the term in glossary form.
- Base currency and quote currency - the two roles, each with its own page.
- Cross rate - the derived rate, and where it is used.
- The currency converter - the pairs themselves, in both directions.
Sources
- SIX, Financial Data Standards - the Maintenance Agency role for ISO 4217 on behalf of the International Organization for Standardization and its Swiss member body, the description as the only recognised authoritative source, the three published lists and their availability, and the practice of issuing amendments with effective dates
- SIX, How Do International Currency Codes Come Into Being? (22 February 2024) - the construction of the three-letter code from the ISO 3166 country code plus the currency initial with the Swiss franc worked example, the three-digit numeric code and the United States dollar example, and the documented exceptions including the euro and the Central and South American deviations
- Bank for International Settlements, Triennial Central Bank Survey: OTC foreign exchange turnover in April 2025 (September 2025) - the statement that the ten most traded pairs all involve the United States dollar and its status as vehicle currency, the currency and pair turnover shares, the note that all currency shares sum to 200 per cent because two currencies are involved in each transaction, and the survey's own United States dollar first table convention. These are the survey's preliminary figures
- European Central Bank, Euro foreign exchange reference rates - the convention of quoting all reference rates with the euro as the base currency
- Reserve Bank of Australia, Definitions and Sources, Exchange Rates - the statement that rates for most currencies are calculated by crossing the United States dollar rate with observed midpoints of buying and selling rates
- Reserve Bank of Australia, Explainer: Exchange Rates and their Measurement - the bilateral exchange rate definition, the cross-rate identity, and the United States dollar as the standard quote currency globally
- Reserve Bank of Australia Bulletin, Developments in Foreign Exchange and Over-the-counter Derivatives Markets (26 February 2026) - the Australian dollar's share of global turnover and its rank, the change from sixth to seventh, and the rank and share of its pair against the United States dollar
Not financial advice, and not a recommendation of any product or institution. Reviewed by the Tradergy editorial team, September 2026.
Common questions
What do the three letters in a currency code mean?
The first two are usually the country code from ISO 3166 and the third is usually the initial of the currency's name. SIX, which maintains the standard, gives the Swiss franc as the worked example: CH for Switzerland plus F for franc. There are documented exceptions, including the euro, and SIX notes many deviations in Central and South America where currencies have been reintroduced.
Who decides currency codes?
SIX acts as the ISO 4217 Maintenance Agency on behalf of the International Organization for Standardization and its Swiss member body, and describes itself as the only recognised authoritative source on currency code designations. It publishes three lists free of charge, covering current currencies, fund codes and historical currencies, with amendments carrying effective dates.
Which currency comes first in a pair?
Whichever convention the institution quoting it uses. The European Central Bank always places the euro first in its reference rates. The Bank for International Settlements places the United States dollar first in its statistical tables. Market convention for the same pairs frequently differs from both. There is no universal ordering rule, and the same rate written either way carries identical information.
What is a cross rate?
A rate between two currencies calculated through a third rather than observed directly. Most currencies are quoted against the United States dollar, so a rate between two non-dollar currencies is usually derived by combining each against the dollar. The Reserve Bank of Australia states that it calculates its published rates for most currencies exactly this way.
What are majors and crosses?
There is no official definition of either term and no authoritative list. In practice majors means the handful of heavily traded pairs involving the United States dollar, and a cross means a pair that does not involve it. The Bank for International Settlements observes that the ten most traded pairs all involve the United States dollar, which is the substance the labels are gesturing at.