Currency Definitions

Base Currency

The currency against which all other currencies will be quoted.


The quoted price that the buyer is willing to pay to purchase the currency and sell another at a particular time.

Cross Rates

The exchange rate between two currencies besides the US dollar.


The lawful currency of a country, circulating paper denomination.


Drawn by a bank against funds to be deposited in another bank.


The unity of the Austrian Schilling, Belgian Franc, Finland Markka, French Franc, German Deutsche Mark, Ireland Punt, Italian Lira, Luxembourg Franc, Portugal Escudo, Spanish Peseta and Greek Drachma. As of Jan. 1, 2002 these currencies are considered legacy currencies.


Financial Transactions and Reports Analysis Centre of Canada. FinTRAC is an integral part of our country’s commitment to the fight against money laundering and terrorist activity financing.

Foreign Exchange

Exchanging of foreign currency. On the foreign exchange market, foreign currency is sold and bought for spot or forward delivery.


Refers to Foreign Exchange.

Forward Contract

A fixed exchange rate for future delivery, on a date agreed by both parties. A deposit is usually required in forward transactions.


The price rate at which a seller is prepared to sell.

Point (or Pip)

Currency brokers use this term to represent the smallest incremental move an exchange rate can make. It is one one-hundredth of a percent.

For example, when a currency moves from 1.2200 to 1.2300 it has moved 100 points.


The actual physical exchange of one currency for another, the final stage of the transaction.

Spot Rate

The current exchange rate for a spot transaction.


The difference of points between the bid and offer prices.

Value Date

The date that both parties agree to exchange currency payments.