Currencies and Their Quotations

Currencies play a key role in the global economy, enabling international trade, investments, and the exchange of goods and services. Each country issues its own currency, which has a specific value relative to other currencies. This value is called a quotation. In this article, we will thoroughly explore what currencies are, how their quotations work, why they are important for financial markets, and how their changes impact the global economy, businesses, and private investors.

What is a currency?

A currency is an official means of payment issued by a central bank or another authorized body of a country. It is used for purchasing goods, paying for services, settling transactions between parties, and accumulating savings. Currencies come in paper form (banknotes), metallic form (coins), and digital form (e.g., funds in bank accounts). Modern currencies also include cryptocurrencies, which operate without the involvement of central authorities.

Currencies are classified based on various criteria:

National currencies: Used within a single country, such as the US dollar (USD), euro (EUR), or Japanese yen (JPY). They ensure economic stability and serve as the basis for domestic transactions.
International currencies: Used in global trade and investments. Major world currencies, such as the US dollar, euro, and Swiss franc (CHF), are utilized for international settlements and reserve storage.
Cryptocurrencies : Decentralized digital assets, such as Bitcoin (BTC) , Ethereum (ETH) , and stablecoins (USDT). They are gaining popularity due to high security and independence from banks.
Regional currencies: Used within economic unions, such as the euro in the European Union or the Eastern Caribbean dollar (XCD) in Caribbean countries.

Each currency has a unique code according to the ISO 4217 standard (e.g., USD, EUR, RUB), which simplifies international settlements and trade. Currencies can also be freely convertible (e.g., USD, EUR) or partially convertible (e.g., Chinese yuan, CNY), which affects their use in global trade.

History of currencies: from barter to digital money

Currencies emerged as a means of simplifying the exchange of goods and services. In ancient times, people used barter, exchanging products directly. However, this approach was inconvenient due to the lack of a common equivalent of value. Over time, rare metals, such as gold and silver, began to be used as currencies, eventually turning into coins.

In the Middle Ages, paper money started to appear, initially as receipts for gold stored in banks. In the 19th century, the gold standard was introduced, tying the value of a currency to a specific amount of gold. For example, in 1900, 1 US dollar was equivalent to 1.5 grams of gold.

In the 20th century, the gold standard was gradually phased out, and currencies became fiat, meaning their value is determined by trust in the state and its economy. Today, most currencies have no physical tie to gold or other assets, and their exchange rate is shaped by market mechanisms. With the development of technology in the 21st century, cryptocurrencies emerged, using blockchain to ensure security and transparency of transactions.

The history of currencies illustrates how economic systems adapt to new challenges. Modern currencies continue to evolve, including central bank digital currencies (CBDCs), which are being tested in China, the EU, and other regions.

What is a currency quotation?

A currency quotation is the value of one currency expressed in units of another. Currencies are traded in pairs, such as EUR/USD, where the first currency (euro) is called the base currency, and the second (US dollar) — the quoted currency. The quotation shows how many units of the quoted currency are needed to buy one unit of the base currency.

For example, if the EUR/USD quotation is 1.10, it means that 1 euro is worth 1.10 US dollars. Quotations come in two types: direct (e.g., USD/RUB = 96.50) and indirect (RUB/USD = 0.0104). Quotations constantly change under the influence of supply and demand in the currency market.

Currency quotations are formed in the Forex market, where trillions of dollars are traded daily. The main market participants are central banks, commercial banks, hedge funds, corporations, and private traders. Quotations depend on economic data, geopolitical events, interest rates, and other factors, making them dynamic and sensitive to changes.

Types of quotations

Currency quotations are divided into several types depending on their structure and application:

Direct quotations: Show the value of a foreign currency in the national currency. For example, in Russia, 1 USD = 96.50 RUB. Such quotations are convenient for domestic analysis and calculations.
Indirect quotations: Show how much of the national currency is worth one unit of a foreign currency. For example, 1 RUB = 0.0104 USD. They are used to assess the international competitiveness of a currency.
Cross-rates: Quotations between two foreign currencies without involving the national currency, such as EUR/GBP or AUD/JPY. Cross-rates are important for traders operating in international markets, as they allow diversification of strategies.
Cryptocurrency quotations: Show the value of digital assets in fiat currencies, such as BTC/USD. These quotations are characterized by high volatility due to the youth of the market.

Each type of quotation has its own specifics. For example, direct quotations are popular among retail traders working with the national currency, while cross-rates are in demand among professional investors seeking to minimize dependence on the US dollar.

How to read currency quotations?

For beginners, reading currency quotations may seem complex, but it is actually quite simple. A currency pair consists of two currencies separated by a slash (e.g., EUR/USD). The first currency is the base, and the second is the quoted currency. The number following the pair indicates how much of the quoted currency is needed to buy one unit of the base currency.

Example: a GBP/USD quotation of 1.30 means that 1 British pound is worth 1.30 US dollars. If the quotation rises (e.g., to 1.32), it indicates a strengthening of the pound relative to the dollar. If it falls (to 1.28), the dollar becomes stronger.

It’s important to consider the spread — the difference between the buying price (Ask) and the selling price (Bid). For example, if EUR/USD has a Bid of 1.1000 and an Ask of 1.1005, the spread is 5 pips. The spread affects the cost of a trade and is particularly important for short-term traders.

Factors affecting currency quotations

Currency quotations are the result of a complex interplay of numerous factors. Understanding these factors helps traders and investors predict exchange rate movements and make informed decisions.

Interest rates: Central banks, such as the US Federal Reserve (Fed) or the European Central Bank (ECB), set interest rates, which affect a currency’s attractiveness. Raising rates makes a currency more profitable for investors, increasing demand for it.
Example: In 2022, the Fed raised rates to combat inflation, which led to the strengthening of the dollar against most currencies.
Economic data: Indicators such as gross domestic product (GDP), unemployment rates, inflation, and business activity indices directly impact a currency. Strong data strengthens a currency, while weak data weakens it.
Example: Japan’s GDP growth in 2023 supported the yen, despite low interest rates.
Political stability: Political crises, elections, or reforms can affect confidence in a currency. Stable countries attract more investments, which strengthens their currency.
Example: Uncertainty surrounding Brexit in 2016–2019 caused significant fluctuations in the British pound.
Forex market: Actions of major players, such as central banks, hedge funds, and corporations, influence quotations. For example, currency interventions can temporarily alter exchange rates.
Example: In 2015, the Swiss National Bank unexpectedly unpegged the franc from the euro, causing a sharp rise in CHF.
Geopolitical events: Wars, sanctions, and trade conflicts can drastically change quotations. For example, sanctions against Russia in 2022 led to a drop in the ruble, but subsequent measures by the Central Bank of Russia stabilized the rate.
Level of external debt: High debt reduces confidence in a currency, increasing the risk of default. For example, the debt crisis in Greece in 2010 weakened the euro.
Speculative factors: Actions of traders and investors based on expectations also affect the market. For example, rumors of a rate hike can trigger a currency’s rise even before an official decision.

For successful market operations, it’s crucial to monitor economic calendars, news, and central bank statements. This helps anticipate changes in quotations and minimize risks.

Adaptation to changing conditions in trading

The role of currency quotations in international trade

Currency quotations are the foundation of the international economy. They determine the value of goods, services, and assets on a global scale, ensuring transparency and stability in settlements. Without quotations, international trade would be impossible, as countries could not agree on the value of exports and imports.

Quotations affect exports and imports in the following ways:

Decline in a currency’s rate: Makes exports cheaper, increasing the competitiveness of goods on the global market. For example, the weakening of the Japanese yen in 2022 boosted Toyota’s car exports.
Rise in a currency’s rate: Makes exports more expensive but reduces the cost of imports. For example, the strengthening of the US dollar in 2023 made imported goods cheaper for American consumers.

Large corporations use quotations to optimize costs. For example, a company manufacturing electronics in China and selling them in Europe tracks the CNY/EUR pair to choose the optimal time for profit conversion. This helps minimize losses due to exchange rate fluctuations.

Currency quotations also play a role in attracting investments. Stable currencies, such as the US dollar or Swiss franc, are considered safe assets, attracting capital. Conversely, volatile currencies, such as the Turkish lira, can deter investors.

Hedging currency risks is another key function of quotations. Companies use forward contracts, options, and swaps to lock in exchange rates and protect against losses. For example, a Russian oil exporter might enter a forward contract on USD/RUB to ensure stable revenue from deliveries to Europe.

In a global context, quotations reflect a country’s economic health. For example, a stable euro exchange rate signals a strong Eurozone economy, while sharp fluctuations in the ruble may indicate external shocks or internal issues.

How do currency quotations work in the Forex market?

The Forex market is a global platform for currency trading, with a daily turnover exceeding 7 trillion dollars (according to BIS data for 2024). Quotations in Forex are formed in real time based on supply and demand, making the market highly liquid and accessible to participants from any part of the world.

Trading is conducted through currency pairs, which are divided into three categories:

Major pairs: Include the US dollar and currencies of developed countries (EUR/USD, USD/JPY, GBP/USD). They account for about 70% of Forex turnover and have low spreads.
Cross-rates: Pairs without the US dollar, such as EUR/JPY or AUD/CAD. They are less liquid but allow strategy diversification.
Exotic pairs: Include currencies of developing countries, such as USD/MXN or EUR/TRY. They are characterized by high volatility and large spreads.

Quotations in Forex are presented in the Bid/Ask format. For example, for EUR/USD, the Bid might be 1.1000, and the Ask — 1.1005. The spread (0.0005) is the cost of the trade paid by the trader to the broker.

The Forex market operates 24/5, but activity depends on trading sessions:

Asian session: Characterized by low volatility, active pairs include those with the yen (USD/JPY).
European session: High activity for pairs with the euro and pound (EUR/USD, GBP/USD).
American session: Peak volatility for pairs with the US dollar.

Traders use technical and fundamental analysis to forecast quotations. Technical analysis includes indicators (RSI, MACD), support and resistance levels. Fundamental analysis relies on economic data, such as inflation, GDP, and central bank decisions.

Example: in March 2023, traders anticipated an ECB rate hike, which led to a rise in EUR/USD from 1.05 to 1.09 in two weeks. Those who used fundamental analysis were able to profit from this movement.

Cryptocurrencies and their quotations

With the emergence of Bitcoin in 2009, cryptocurrencies became a revolutionary asset class that reshaped perceptions of finance and currency markets. Cryptocurrency quotations, such as BTC/USD, ETH/EUR, or XRP/USDT, are formed on specialized crypto exchanges like Binance, Coinbase, Kraken, and Bybit. These quotations are characterized by extreme volatility, making cryptocurrencies both attractive for speculators and risky for long-term investors.

For example, in 2021, Bitcoin demonstrated impressive growth from $29,000 to a record $69,000, driven by institutional investments and widespread interest in blockchain technologies. However, in 2022, the tightening of monetary policy by the US Federal Reserve (Fed) led to a drop in BTC to $16,000. In 2024, the market recovered, and Bitcoin reached new highs around $80,000, according to CoinMarketCap data, thanks to the Fed’s policy easing and the legalization of cryptocurrencies in several countries.

Cryptocurrency quotations depend on numerous factors, which make them unique compared to traditional currencies:

Supply and demand: The growing popularity of blockchain technologies and decentralized finance (DeFi) increases demand for cryptocurrencies. For example, in 2023, the launch of new DeFi protocols raised Ethereum’s price by 40% in a quarter.
Regulation: Government restrictions or support significantly impact the market. For example, a ban on cryptocurrency transactions in China in 2021 caused a market crash, while the adoption of Bitcoin as legal tender in El Salvador in the same year strengthened its position.
Technological factors: Blockchain network updates directly affect quotations. Ethereum’s transition to the Proof-of-Stake mechanism in 2022 (The Merge) improved the network’s energy efficiency and strengthened ETH by 25% in a month. Similarly, updates to the Cardano (ADA) network in 2024 attracted new investors.
Macroeconomic conditions: Inflation, changes in interest rates, and economic instability can push investors toward cryptocurrencies as “digital gold.” For example, in 2024, rising inflation in the EU increased demand for Bitcoin as a capital preservation tool.
Market sentiment: Social media platforms, such as X, play a key role in shaping trends. For example, Elon Musk’s tweets in 2021 triggered sharp spikes in Dogecoin, and in 2024, discussions about new Bitcoin ETFs amplified the bullish trend.

Cryptocurrencies complement traditional currencies, offering an alternative to centralized financial systems. However, their high volatility requires a cautious approach. For example, in April 2025, Bitcoin’s price fluctuates in the range of $75,000–$85,000, reflecting uncertainty ahead of the Fed’s interest rate meeting. To reduce risks, investors use stablecoins, such as USDT, USDC, and DAI, which are pegged to the US dollar and provide stability for settlements.

A key trend in 2025 is the development of central bank digital currencies (CBDCs). For example, the digital yuan (e-CNY) is actively used in China, and the European Central Bank is testing the digital euro. These currencies compete with cryptocurrencies but cannot fully replace them due to the decentralized nature of blockchain. For traders, cryptocurrency quotations open opportunities for arbitrage — buying on one exchange at a low price and selling on another at a higher price. For example, the price difference for BTC/USD between Binance and Coinbase can reach 1–2% during periods of high volatility.

To successfully trade cryptocurrencies, it’s crucial to monitor news, analyze charts, and use risk management tools, such as stop-losses. Platforms like TradingView provide indicators (RSI, Bollinger Bands), which help forecast quotation movements. Beginners are advised to start with small amounts and study the basics of blockchain to understand how technological changes impact the market.

How to forecast currency quotations?

Forecasting currency quotations is a complex process that requires in-depth data analysis and an understanding of market mechanisms. Successful traders and investors use a combination of methods to predict currency exchange rate movements and minimize risks. In the high-volatility environment of 2025, accurate forecasts are especially important for protecting capital and generating profits.

Main approaches to forecasting include:

Technical analysis : This method is based on studying historical data and price charts to identify patterns. Traders use indicators, such as moving averages (SMA, EMA), the Relative Strength Index (RSI), and Fibonacci levels, to determine entry and exit points. For example, a support level for EUR/USD at 1.0800 in March 2025 signaled a potential trend reversal, enabling traders to open long positions.
Key tools include support levels (where the price may stop falling) and resistance levels (where the price may reverse downward). For example, in 2024, the USD/JPY pair tested resistance at 150.00, followed by a pullback, which signaled a sell opportunity.
Fundamental analysis : Evaluates economic, political, and social factors affecting a currency. Key indicators include gross domestic product (GDP), unemployment rates, inflation, and central bank decisions. For example, the US employment report (Non-Farm Payrolls), published monthly, often triggers sharp movements in the US dollar. In February 2025, strong NFP data strengthened USD against EUR by 2% in a single day.
Other factors include interest rates and central bank statements. For example, a hint from ECB President Christine Lagarde about a rate hike in 2024 led to a 1.5% rise in the euro over a week.
Sentiment analysis: Examines market sentiment through news, social media, and investor behavior. Platforms like X help track public opinion. For example, in 2024, rumors about the Fed easing monetary policy, widely discussed on X, drove EUR/USD up from 1.0700 to 1.0900 in two weeks. Sentiment analysis tools, such as StockTwits or LunarCrush, enable quantitative assessment of sentiment for specific currency pairs.
Machine learning and algorithms: In 2025, artificial intelligence is becoming a vital tool for forecasting. Algorithms analyze vast amounts of data, including historical quotations, economic indicators, and news, to identify hidden patterns. For example, hedge funds use machine learning models to predict USD/JPY movements with up to 70% accuracy, according to a 2024 Bloomberg report.

To improve accuracy, traders combine approaches. For example, fundamental analysis helps identify a long-term trend (e.g., dollar strengthening due to Fed rate hikes), while technical analysis pinpoints the optimal entry point (e.g., a breakout above a resistance level). Sentiment analysis complements the picture by accounting for short-term market expectations.

Practical example: in April 2025, traders anticipate the release of Eurozone inflation data. If inflation exceeds forecasts, the euro may strengthen. Technical analysis shows that the EUR/USD pair is in an ascending channel with support at 1.0850. A trader might open a long position expecting a rise to 1.1000, setting a stop-loss below the support level.

Beginners are advised to use economic calendars (e.g., on Investing.com) to track key events, such as Fed or ECB meetings or GDP data releases. It’s also useful to test strategies on demo accounts to avoid financial losses early on. It’s important to remember that even the best forecasts don’t guarantee success due to the market’s unpredictability, so risk management remains a priority.

Risks and opportunities of the currency market

The currency market, including Forex and cryptocurrencies, offers unique opportunities for profit but comes with high risks. Understanding these aspects helps traders and investors make informed decisions and effectively manage capital. In 2025, amid global economic instability, this is particularly relevant.

Main risks of the currency market include:

High volatility: Sharp changes in quotations can lead to significant losses. For example, in January 2015, the Swiss National Bank unexpectedly unpegged the franc from the euro, causing a 30% surge in CHF in a few hours. Traders who didn’t use stop-losses lost millions.
A similar example is the collapse of the Turkish lira in 2023 due to high inflation, when the USD/TRY pair rose by 20% in a month, impacting investors holding lira.
Leverage: Using borrowed funds (e.g., 1:100) increases potential profits but multiplies losses. For example, with 1:50 leverage, a 2% price movement against a trader’s position can wipe out the entire deposit if no limits are set.
Geopolitical shocks: Unpredictable events, such as sanctions, trade wars, or conflicts, can alter the market in hours. For example, in 2022, sanctions against Russia caused the ruble to plummet to historic lows (USD/RUB = 120), though subsequent measures by the Central Bank of Russia stabilized the rate.
Psychological factors: Emotional decisions, such as greed or panic, often lead to losses. For example, in 2024, many traders closed EUR/USD positions at lows out of fear of further declines, missing the subsequent trend reversal.
Technological risks: Platform glitches or cyberattacks can disrupt trading. For example, in 2023, a hacker attack on the Binance exchange temporarily froze withdrawals, causing panic among users.

Despite the risks, the currency market offers numerous opportunities:

Accessibility: Forex operates 24 hours, 5 days a week, allowing traders from different time zones to choose convenient trading times. For example, the Asian session is suitable for yen pairs, while the European session suits euro and pound pairs.
Diversification: Hundreds of currency pairs, including majors (EUR/USD), cross-rates (EUR/JPY), and exotics (USD/ZAR), provide opportunities to build flexible strategies. For example, a trader can trade USD/JPY for short-term gains and AUD/NZD for long-term hedging.
Hedging: Using derivatives, such as options and forward contracts, protects capital from adverse market movements. For example, a Japanese exporter can lock in the USD/JPY rate to ensure revenue from US deliveries.
High liquidity: Forex’s daily turnover exceeds 7 trillion dollars (per BIS data for 2024), ensuring instant trade execution even for large volumes.
Learning and automation: Modern platforms like MetaTrader 5 offer tools for automated trading (advisors) and education. Beginners can use demo accounts to master the market without risk.

To minimize risks, traders should follow several rules:

Use stop-losses to limit losses. For example, when trading GBP/USD, setting a stop-loss 1% below the entry point protects against unexpected drops.
Manage capital, risking no more than 1–2% of the deposit per trade. This allows surviving a series of losses without significant damage.
Avoid emotional decisions by sticking to a pre-developed trading plan.
Regularly analyze the market using economic calendars and news aggregators to prepare for key events, such as inflation data releases or central bank decisions.

Practical example: in March 2025, a trader expects the Canadian dollar to strengthen due to rising oil prices (Canada is a major exporter). They open a long position on USD/CAD with 1:20 leverage, setting a stop-loss at 1.3400 and a take-profit at 1.3200. If the forecast is correct, the profit would be 100 pips, with risk limited to 50 pips.

The currency market in 2025 remains dynamic, but with the right approach, it can become a source of stable income. The key is combining knowledge, discipline, and modern analytical tools.

Conclusion

Currencies and their quotations form the backbone of the global economy, determining the value of goods, services, and financial assets. From traditional currencies like the US dollar and euro to cryptocurrencies like Bitcoin and Ethereum, these instruments play a pivotal role in international trade, investments, and risk management. Understanding how currency quotations work enables traders, investors, and businesses to operate effectively amid global instability.

The Forex market, with its high liquidity and round-the-clock accessibility, opens doors to profit but demands deep knowledge and discipline. Cryptocurrencies add a new layer of opportunities, bringing innovation, but their volatility underscores the need for caution. By studying economic data, technical and fundamental analysis, and modern trends like central bank digital currencies, one can not only protect assets but also grow them.

In 2025, currency quotations remain a mirror of global processes — from central bank decisions to geopolitical events. They don’t just reflect the current situation but also point to the future of the economy. By mastering forecasting tools and risk management, every market participant can leverage these opportunities to achieve financial goals.