CandleFocus Glossary Editor
The International Organization for Standardization (ISO) is responsible for the world-wide recognized three-letter currency codes that represent various currencies. ISO's currency codes were established in 1978 and are regularly updated to reflect changes in the international economy and foreign currencies. They provide standardized, three-letter codes for each country's currency. ISO currency codes are also known as ISO 4217 codes as they were originally adopted in the year 4217 of the International Standard (ISO-4217:1978).
ISO currency codes provide a reference point for merchants to identify and accurately interpret currency values without misunderstanding the exact currency amounts. This makes it easier to accept and calculate international payments. Many companies, especially those in e-commerce, use the ISO currency codes to clearly indicate the currency that customers must pay in. All international online transactions must use the currency codes to ensure compliance with international laws governing online transactions.
The three-letter codes provide a major benefit to users who trade in global markets, such as the foreign exchange (forex) market. In forex, the ISO currency codes are used to identify the base and quote currencies in a price quote. It is important to understand these coded abbreviations when reading forex quotes, which are commonly spelled out as currency pairs – for example, a euro to U.S. dollar (EUR/USD). A price quote of EUR/USD 1.2508, as an example, implies that one euro will buy 1.2508 U.S. dollars.
In addition to the three-letter codes, ISO has also established lesser known numeric equivalents, of four-digits, for the same currency codes. This system is typically used in computer systems that require numerical values to represent currency. The numeric code is based on the three-digit code, with the addition of a zero placed at the beginning of the number. For example, the United States dollar’s three-letter code (USD) is 840, while the four-digit code is 0840.
ISO currency codes have revolutionized global transactions as people and businesses need not be confused about the currency of a transaction or a payment. These codes are essential to international financial transactions, as is evident from the fact that many countries that have participated in the global financial trading markets have adopted the ISO currency codes as the official identification of their currency values.
ISO currency codes provide a reference point for merchants to identify and accurately interpret currency values without misunderstanding the exact currency amounts. This makes it easier to accept and calculate international payments. Many companies, especially those in e-commerce, use the ISO currency codes to clearly indicate the currency that customers must pay in. All international online transactions must use the currency codes to ensure compliance with international laws governing online transactions.
The three-letter codes provide a major benefit to users who trade in global markets, such as the foreign exchange (forex) market. In forex, the ISO currency codes are used to identify the base and quote currencies in a price quote. It is important to understand these coded abbreviations when reading forex quotes, which are commonly spelled out as currency pairs – for example, a euro to U.S. dollar (EUR/USD). A price quote of EUR/USD 1.2508, as an example, implies that one euro will buy 1.2508 U.S. dollars.
In addition to the three-letter codes, ISO has also established lesser known numeric equivalents, of four-digits, for the same currency codes. This system is typically used in computer systems that require numerical values to represent currency. The numeric code is based on the three-digit code, with the addition of a zero placed at the beginning of the number. For example, the United States dollar’s three-letter code (USD) is 840, while the four-digit code is 0840.
ISO currency codes have revolutionized global transactions as people and businesses need not be confused about the currency of a transaction or a payment. These codes are essential to international financial transactions, as is evident from the fact that many countries that have participated in the global financial trading markets have adopted the ISO currency codes as the official identification of their currency values.