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Knowledge Base/Finance/Foreign Exchange
From The Thalesians
THIS PAGE IS CURRENTLY UNDER CONSTRUCTION!
Introduction
Overview
Foreign exchange is by far the largest financial market in the world. In April 2007, the estimated daily average global turnover was $3,210 billion for traditional markets(spot transactions, outright forwards, and foreign exchange swaps) markets and $2,090 billion for over-the-counter derivatives (bissurvey2007). London remains the global centre accounting for more than a third of all foreign exchange transactions.
Further Reading
Every three years the Bank for International Settlements (BIS) coordinates a global bank survey of foreign exchange markets. At the time of writing, the most recent published survey was (bissurvey2007). It provides a good account of the current state of affairs in global currency markets backed by a wealth of statistical data. The most recent survey is accessible online at http://www.bis.org/triennial.htm
Mechanics of Currency Markets
Overview
Foreign exchange practitioners use a large number of technical terms and buzzwords. Many of them are introduced in this chapter. Wherever possible, we strive to give formal definitions; however, sometimes it is more practical to "define" the terms by means of examples. In these cases, the meaning of the terms should be obvious from the context.
Methods of Quotation
Consider a typical foreign exchange rate quote:
EUR/CHF 1.6652
"EUR/CHF" denotes a currency pair. Here "EUR" and "CHF" are the three-letter ISO currency codes for the euro and Swiss frank. The first (left-hand) currency is known as the foreign currency. The second (right-hand) currency is known as the domestic currency. (Note: The foreign currency is sometimes referred to as the base currency or simply base. The domestic currency is sometimes referred to as the variable currency, counter currency or simply counter, quote or quoted currency, or terms currency.)
The foreign currency can be thought of as a "commodity" that is being purchased or sold for "cash", the domestic currency. The quote expresses the value of a single unit of the foreign currency in terms of units of the domestic currency. In our case, the quote is saying that one euro is worth 1.6652 Swiss franks. The number 1.6652 is the exchange rate, or the spot price of EUR in terms of CHF.
When we buy foreign currency for domestic currency we go long or establish a long position. When we sell foreign currency for domestic currency we go short or establish a short position. In each case we enter a trade, which results in an open position. It remains open until it is closed out by entering into an equal and opposite trade. For example, if we are long 300 euros (we have bought them for 300 × 1.6652 Swiss franks), we close the position by selling 300 euros. (Note: Presumably also for 300 × 1.6652 Swiss franks; although FX rates don't tend to stay constant over time.) Thus we no longer have an open position (it is now closed), nor are we long EUR (we are flat).
When we say that we are long EUR/CHF, we mean that we are long EUR (the foreign currency), short CHF (the domestic currency); i.e. we have bought euros for Swiss franks. Similarly, when we say that we are short EUR/CHF, we mean that we are short EUR, long CHF; i.e. we have sold euros for Swiss franks. Thus "long" or "short" is always referring to the foreign currency, our "commodity".
It is, however, uncommon for a broker or market maker to quote the same exchange rate for buying and selling. The quote will usually include two rates. Hence the name, a two-way quote:
EUR/CHF 1.6652/1.6655
The first number, which is almost always smaller, is the bid (); this is the rate at which the quoting broker or market maker is prepared to buy the foreign currency for the domestic currency. The second number, which is almost always larger, is the ask or offer (
); this is the rate at which the quoting broker or market maker is prepared to sell the foreign currency for the domestic currency. The difference,
is known as the bid-ask spread (sometimes simply spread). In our example, the bid-ask spread is
or 3 pips. A point or pip (Note: Pip is an acronym for "percentage-in-point".) is the smallest incremental price movement for a given currency pair in the interbank market. For EUR/CHF it is 0.0001, or exactly one basis point ().
Although one pip is often equal to one basis point, this is not always the case. For USD/JPY one pip equals 0.01 Japanese yen, not 0.0001.
As in our example, foreign exchange rates are usually quoted to the nearest pip. Sometimes the quote is abbreviated as follows:
EUR/CHF 1.6652/55
Alternatively, since the first few digits are unlikely to change over a short period of time, only the last two digits are given:
EUR/CHF 52/55
This is known as the small figure. The big figure is given by the two digits preceding the last two:
EUR/CHF 66/66
Currencies
Introduction
Group of Ten (G10) Currencies
| ISO Currency Code | Currency Name | Country/Entity | Symbol | HTML | Old ISO Currency Code | Nickname |
|---|---|---|---|---|---|---|
| AUD | Australian dollar | Australia | Aussie | |||
| CAD | Canadian dollar | Canada | Loonie, Cad, Canada | |||
| CHF | Swiss franc | Switzerland | Swissy, Swiss | |||
| EUR | Euro | European Union | € | € | Euro | |
| GBP | British pound sterling | United Kingdom | £ | £ | Sterling | |
| JPY | Japanese yen | Japan | ¥ | ¥ | Gopher, Yen; GBP/JPY = Geppy | |
| NOK | Norwegian krone | Norway | Nokee | |||
| NZD | New Zealand dollar | New Zealand | Kiwi | |||
| SEK | Swedish krona | Sweden | Stockee | |||
| USD | US dollar | United states | $ | $ | Dollar; greenback |
Emerging Markets (EM) Currencies
| ISO Currency Code | Currency Name | Country/Entity | Symbol | HTML | Old ISO Currency Code | Nickname |
|---|---|---|---|---|---|---|
| ARS | Argentine peso | Argentine | ||||
| BRL | Brazilian real | Brazil | ||||
| CLP | Chilean peso | Chile | ||||
| CNY | Chinese yuan renminbi | China | ||||
| CZK | Czech koruna | Czech Republic | CSK | Czech | ||
| HKD | Hong Kong dollar | Hong Kong | ||||
| HUF | Hungarian forint | Hungary | ||||
| IDR | Indonesian rupiah | Indonesia | ||||
| ILS | Israeli shekel | Israel | ₪ | ₪ | Shekel | |
| INR | Indian rupee | India | Rp | |||
| ISK | Iceland krona | Iceland | ||||
| KRW | South Korean won | South Korea | ₩ | ₩ | ||
| MXN | Mexican peso | Mexico | MXP | |||
| MYR | Malaysian ringgit | Malaysia | ||||
| PHP | Philippine peso | Philippines | ||||
| PLN | Polish zloty | Poland | Poland | |||
| RON | Romanian new leu | Romania | ROL | |||
| RUB | Russian ruble | Russian Federation | ||||
| SGD | Singapore dollar | Singapore | ||||
| SKK | Slovak koruna | Slovakia | ||||
| THB | Thai baht | Thailand | ฿ | ฿ | ||
| TRY | Turkish new lira | Turkey | TRL | Turkey | ||
| TWD | Taiwan new dollar | Taiwan | ||||
| ZAR | South African rand | South Africa | ZAL |
Classification
TODO: Add ISO 4217 to the bibliography.
A standard way to identify the currencies is by their three-letter ISO currency codes (Note: The three-letter ISO currency codes were established by the International Organization for Standardization (ISO) in its international standard ISO 4217. In general, the first two letters of the code are the two letters of ISO 3166-1 alpha-2 country codes and the third is the initial of the currency name. As usual, there are exceptions.}. A full list of ISO currency codes is given in the appendix.
TODO: In which order should we list the currencies?
The currencies are often classified into two groups based on their liquidity. The most liquid currencies are those of the Group of Ten (G10). These currencies, known as the G10 currencies, are United States dollar (USD), euro (EUR), Japanese yen (JPY), pound sterling (GBP), Swiss franc (CHF), Australian dollar (AUD), Canadian dollar (CAD), Swedish krona (SEK), Norwegian krone (NOK), and New Zealand dollar (NZD) (Note: The currencies are listed in the order of the distribution of reported foreign exchange market turnover (bissurvey2007, page 11).) The remaining currencies are known as the EM currencies, where EM stands for "emerging markets". For example, the Hungarian forint (HUF), Turkish lira (TRY), and Chinese yuan (CNY) are EM currencies. There are many more.
The commodity-sensitive currencies are positively correlated with commodity prices. They include the Norwegian krone (oil), Australian dollar (copper), and New Zealand dollar (milk). These currencies are closely linked to growth cycles.
TODO: Pro-cyclical and counter-cyclical currencies
We shall now take a closer look at individual currencies. First the G10, since they are the most liquid, then the EM.
G10 Currencies
United States Dollar (USD)
History
Economics
Japanese Yen (JPY)
History
Economics
The Japanese yen is a low-yielding currency, and as such it is frequently used for carry trades. Investors can borrow the Japanese yen cheaply to fund the purchase of higher-yielding assets, usually currencies such as the Australian dollar or New Zealand dollar. They sell the yen, thus driving it down.
Risk aversion boosts the Japanese yen. When investors are worried about the slowing global economy or equity market sell-offs, they tend to buy the yen acting as a safe haven. Many of these investors are Japanese nationals who historically tend to repatriate their large overseas holdings in times of market distress. Carry trades are usually unwound; yen is bought rather than sold.
For example, following the credit crunch of 2007, yen rallied in the early 2008 despite its relatively weak economic fundamentals. A similar yen rally was observed during the major credit shock of the late 1990s.
Pound Sterling (GBP)
History
Economics
Sterling has historically been the currency most positively correlated to global growth. Global economic slowdowns tend to have a negative effect on its exchange rate. It is a counter-cyclical currency.
Swiss Franc (CHF)
History
Economics
The Swiss franc is negatively correlated with \textit{global growth}. It is generally seen by investors as a safe haven, so in times of global economic slowdowns the franc tends to strengthen. It is a pro-cyclical currency.
Australian Dollar (AUD)
History
Economics
Australia is the world's fourth largest producer of copper after Chile, the United States, and Peru, with mine production estimated to reach 950 million ton per year in 2006 (Source: U.S. Geological Survey, http://minerals.er.usgs.gov/minerals/pubs/commodity/copper/coppemcs07.pdf). The Australian dollar tends to be positively correlated with copper prices.
Canadian Dollar (CAD)
History
Economics
Swedish Krona (SEK)
History
Economics
Norwegian Krone (NOK)
History
Economics
Norway is one of the world's top oil producers (ranking 10th in 2006 with 2,785 thousand barrels per day) and oil net exporters (ranking 3rd in 2006 with 2,542 thousand barrels per day after Saudi Arabia and Russia) (Source: Energy Information Administration (US), http://www.eia.doe.gov/emeu/cabs/topworldtables1_2.htm). Therefore oil prices exert a major influence on the krone.
New Zealand Dollar (NZD)
History
Economics
New Zealand dollar tends to be correlated with milk prices.
EM Currencies
CZK
HUF
KRW
TWD
CNY
MYR
PHP
IDR
INR
SGD
G10 Trades
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
AUD/USD
NZD/USD
USD/SEK
EUR/JPY
EUR/GBP
EUR/CHF
EUR/NOK
EUR/SEK
Macroeconomics
Factors Affecting Currency Exchange Rates
Oil Prices
Gold Prices
Options
Terminology
A foreign currency option is an agreement between two parties, the buyer or holder of the option and the seller or writer of the option, that gives the buyer of the option the right, but not the obligation, to exchange a specified amount (the notional amount or face value) of one currency for another currency on a nominated future date.
A call on currency XXX gives the buyer the right to buy currency XXX (the seller of the option is obliged to sell currency XXX to the buyer if the option is exercised). A put on currency YYY gives the buyer the right to sell currency YYY (the seller of the option is obliged to buy currency YYY from the buyer if the option is exercised).
Of course, a foreign exchange option is written on a currency pair, rather than a single currency, say XXXYYY, where XXX is the foreign currency and YYY is the domestic currency, as usual. Thus each currency option is simultaneously a call and a put: a call on the foreign currency is a put on the domestic currency and vice versa, a put on the foreign currency is a call on the domestic currency.
If we simply say that an option is a call, we mean that it is a call on the foreign currency (Note: Always assume the foreign currency: it is our "commodity", whereas the domestic currency is "cash".) (and a put on the domestic currency). If we say that an option is a put, we mean that is is a put on the foreign currency (and a call on the domestic currency). Thus a USDJPY call is a USD call, JPY put. A USDJPY put is a USD put, JPY call. Yet we prefer to specify explicitly, to avoid confusion: "USD call/JPY put" or "USD put/JPY call", as the case might be.
The premium or option price is the price payable by the buyer to the seller for entering into the option contract. It is set by the seller of the option and is a function of the expiry date, delivery date, strike exchange rate, spot exchange rate, forward exchange rate and the style of the option.
The parties enter an option contract on a trade date (dealing date). The premium is payable by the buyer to the seller on the spot date, which is usually two clear business days after the trade date, although there are exceptions.
The expiry date is the date on which the buyer's right to exercise the option expires. The time of expiry is the time of day that the option expires on the expiry date.
There are two common styles of options. The American style options can be exercised by the buyer at any time on any day up to the expiry time on the expiry date. The European style options can only be exercised on the expiry date and before the expiry time. The date on which the option is exercised is known as the exercise date. For European style options, the exercise date is always the expiry date.
There are other, less common option styles, usually classified as exotic. Asian style options have an exercise price equal to the average price of the underlying asset over a given period. Therefore they do not have a pre-determined strike. Bermudan style options (Note: The island of Bermuda lies between America and Europe. Bermudan style options "lie between" the American and European style options, in the sense that they have the features of both. Hence the name.) can be exercised before the expiry date, like American style options. However, their early exercise is restricted to certain pre-determined dates during the lifetime of the option (usually between a pre-determined early exercise date and the expiry date).
The delivery date is the date on which the exchange of currencies takes place, if the buyer exercises the option. It is usually two clear business days after the expiry date.
Thus for option contracts, there are four dates of importance: trade date, spot date, expiry date and delivery date.
The current spot exchange rate is the exchange rate at the time and on the day the option contract is entered into. The current forward exchange rate is the exchange rate at the time and on the...
To be continued...
Appendix: ISO Currency Codes
| Code | Num | E | Currency | Locations using this currency |
|---|---|---|---|---|
| AED | 784 | 2 | United Arab Emirates Dirham | United Arab Emirates |
| AFN | 971 | 2 | Afghan Afghani | Afghanistan |
| ALL | 008 | 2 | Albanian Lek | Albania |
| AMD | 051 | 2 | Armenian Dram | Armenia |
| ANG | 532 | 2 | Netherlands Antillian Guilder | Netherlands Antilles |
| AOA | 973 | 2 | Kwanza | Angola |
| ARS | 032 | 2 | Argentine Peso | Argentina |
| AUD | 036 | 2 | Australian Dollar | Australia, Australian Antarctic Territory, Christmas Island, Cocos (Keeling) Islands, Heard and McDonald Islands, Kiribati, Nauru, Norfolk Island, Tuvalu |
| AWG | 533 | 2 | Aruban Guilder | Aruba |
| AZN | 944 | 2 | Azerbaijanian Manat | Azerbaijan |
| BAM | 977 | 2 | Convertible Marks | Bosnia and Herzegovina |
| BBD | 052 | 2 | Barbados Dollar | Barbados |
| BDT | 050 | 2 | Bangladeshi Taka | Bangladesh |
| BGN | 975 | 2 | Bulgarian Lev | Bulgaria |
| BHD | 048 | 3 | Bahraini Dinar | Bahrain |
| BIF | 108 | 0 | Burundian Franc | Burundi |
| BMD | 060 | 2 | Bermudian Dollar (customarily known as Bermuda Dollar) | Bermuda |
| BND | 096 | 2 | Brunei Dollar | Brunei |
| BOB | 068 | 2 | Boliviano | Bolivia |
| BOV | 984 | 2 | Bolivian Mvdol (Funds code) | Bolivia |
| BRL | 986 | 2 | Brazilian Real | Brazil |
| BSD | 044 | 2 | Bahamian Dollar | Bahamas |
| BTN | 064 | 2 | Ngultrum | Bhutan |
| BWP | 072 | 2 | Botswana Pula | Botswana |
| BYR | 974 | 0 | Belarussian Ruble | Belarus |
| BZD | 084 | 2 | Belize Dollar | Belize |
| CAD | 124 | 2 | Canadian Dollar | Canada |
| CDF | 976 | 2 | Franc Congolais | Democratic Republic of Congo |
| CHE | 947 | 2 | WIR Euro (complementary currency) | Switzerland |
| CHF | 756 | 2 | Swiss Franc | Switzerland, Liechtenstein |
| CHW | 948 | 2 | WIR Franc (complementary currency) | Switzerland |
| CLF | 990 | 0 | Unidades de formento (Funds code) | Chile |
| CLP | 152 | 0 | Chilean Peso | Chile |
| CNY | 156 | 2 | Yuan Renminbi | Mainland China |
| COP | 170 | 2 | Colombian Peso | Colombia |
| COU | 970 | 2 | Unidad de Valor Real | Colombia |
| CRC | 188 | 2 | Costa Rican Colon | Costa Rica |
| CUP | 192 | 2 | Cuban Peso | Cuba |
| CVE | 132 | 2 | Cape Verde Escudo | Cape Verde |
| CYP | 196 | 2 | Cyprus Pound | Cyprus |
| CZK | 203 | 2 | Czech Koruna | Czech Republic |
| DJF | 262 | 0 | Djibouti Franc | Djibouti |
| DKK | 208 | 2 | Danish Krone | Denmark, Faroe Islands, Greenland |
| DOP | 214 | 2 | Dominican Peso | Dominican Republic |
| DZD | 012 | 2 | Algerian Dinar | Algeria |
| EEK | 233 | 2 | Kroon | Estonia |
| EGP | 818 | 2 | Egyptian Pound | Egypt |
| ERN | 232 | 2 | Eritrean Nakfa | Eritrea |
| ETB | 230 | 2 | Ethiopian Birr | Ethiopia |
| EUR | 978 | 2 | Euro | European Union |
| FJD | 242 | 2 | Fiji Dollar | Fiji |
| FKP | 238 | 2 | Falkland Islands Pound | Falkland Islands |
| GBP | 826 | 2 | Pound Sterling | United Kingdom |
| GEL | 981 | 2 | Georgian Lari | Georgia |
| GHS | 288 | 2 | Cedi | Ghana |
| GIP | 292 | 2 | Gibraltar pound | Gibraltar |
| GMD | 270 | 2 | Dalasi | Gambia |
| GNF | 324 | 0 | Guinea Franc | Guinea |
| GTQ | 320 | 2 | Guatemalan Quetzal | Guatemala |
| GYD | 328 | 2 | Guyana Dollar | Guyana |
| HKD | 344 | 2 | Hong Kong Dollar | Hong Kong Special Administrative Region (People's Republic of China) |
| HNL | 340 | 2 | Honduran Lempira | Honduras |
| HRK | 191 | 2 | Croatian Kuna | Croatia |
| HTG | 332 | 2 | Haiti Gourde | Haiti |
| HUF | 348 | 2 | Forint | Hungary |
| IDR | 360 | 2 | Rupiah | Indonesia |
| ILS | 376 | 2 | New Israeli Shekel | Israel |
| INR | 356 | 2 | Indian Rupee | Bhutan, India |
| IQD | 368 | 3 | Iraqi Dinar | Iraq |
| IRR | 364 | 2 | Iranian Rial | Iran |
| ISK | 352 | 2 | Iceland Krona | Iceland |
| JMD | 388 | 2 | Jamaican Dollar | Jamaica |
| JOD | 400 | 3 | Jordanian Dinar | Jordan |
| JPY | 392 | 0 | Japanese yen | Japan |
| KES | 404 | 2 | Kenyan Shilling | Kenya |
| KGS | 417 | 2 | Kyrgyzstani Som | Kyrgyzstan |
| KHR | 116 | 2 | Riel | Cambodia |
| KMF | 174 | 0 | Comoro Franc | Comoros |
| KPW | 408 | 2 | North Korean Won | North Korea |
| KRW | 410 | 0 | South Korean Won | South Korea |
| KWD | 414 | 3 | Kuwaiti Dinar | Kuwait |
| KYD | 136 | 2 | Cayman Islands Dollar | Cayman Islands |
| KZT | 398 | 2 | Tenge | Kazakhstan |
| LAK | 418 | 2 | Lao Kip | Laos |
| LBP | 422 | 2 | Lebanese Pound | Lebanon |
| LKR | 144 | 2 | Sri Lanka Rupee | Sri Lanka |
| LRD | 430 | 2 | Liberian Dollar | Liberia |
| LSL | 426 | 2 | Loti | Lesotho |
| LTL | 440 | 2 | Lithuanian Litas | Lithuania |
| LVL | 428 | 2 | Latvian Lats | Latvia |
| LYD | 434 | 3 | Libyan Dinar | Libya |
| MAD | 504 | 2 | Moroccan Dirham | Morocco, Western Sahara |
| MDL | 498 | 2 | Moldovan Leu | Moldova |
| MGA | 969 | 0 | Malagasy Ariary | Madagascar |
| MKD | 807 | 2 | Denar | Former Yugoslav Republic of Macedonia |
| MMK | 104 | 2 | Kyat | Myanmar |
| MNT | 496 | 2 | Tugrik | Mongolia |
| MOP | 446 | 2 | Macanese pataca | Macau Special Administrative Region (People's Republic of China) |
| MRO | 478 | 2 | Ouguiya | Mauritania |
| MTL | 470 | 2 | Maltese Lira | Malta |
| MUR | 480 | 2 | Mauritius Rupee | Mauritius |
| MVR | 462 | 2 | Rufiyaa | Maldives |
| MWK | 454 | 2 | Malawian Kwacha | Malawi |
| MXN | 484 | 2 | Mexican Peso | Mexico |
| MXV | 979 | 2 | Mexican Unidad de Inversion (UDI) (Funds code) | Mexico |
| MYR | 458 | 2 | Malaysian Ringgit | Malaysia |
| MZN | 943 | 2 | Mozambican Metical | Mozambique |
| NAD | 516 | 2 | Namibian Dollar | Namibia |
| NGN | 566 | 2 | Naira | Nigeria |
| NIO | 558 | 2 | Cordoba Oro | Nicaragua |
| NOK | 578 | 2 | Norwegian Krone | Norway |
| NPR | 524 | 2 | Nepalese Rupee | Nepal |
| NZD | 554 | 2 | New Zealand Dollar | Cook Islands, New Zealand, Niue, Pitcairn, Tokelau |
| OMR | 512 | 3 | Rial Omani | Oman |
| PAB | 590 | 2 | Panamanian Balboa | Panama |
| PEN | 604 | 2 | Peruvian Nuevo Sol | Peru |
| PGK | 598 | 2 | Papua New Guinean Kina | Papua New Guinea |
| PHP | 608 | 2 | Philippine Peso | Philippines |
| PKR | 586 | 2 | Pakistan Rupee | Pakistan |
| PLN | 985 | 2 | Zloty | Poland |
| PYG | 600 | 0 | Paraguayan Guarani | Paraguay |
| QAR | 634 | 2 | Qatari Rial | Qatar |
| RON | 946 | 2 | Romanian New Leu | Romania |
| RSD | 941 | 2 | Serbian Dinar | Serbia |
| RUB | 643 | 2 | Russian Ruble | Russia, Abkhazia, South Ossetia |
| RWF | 646 | 0 | Rwanda Franc | Rwanda |
| SAR | 682 | 2 | Saudi Riyal | Saudi Arabia |
| SBD | 090 | 2 | Solomon Islands Dollar | Solomon Islands |
| SCR | 690 | 2 | Seychelles Rupee | Seychelles |
| SDG | 938 | 2 | Sudanese Pound | Sudan |
| SEK | 752 | 2 | Swedish Krona | Sweden |
| SGD | 702 | 2 | Singapore Dollar | Singapore |
| SHP | 654 | 2 | Saint Helena Pound | Saint Helena |
| SKK | 703 | 2 | Slovak Koruna | Slovakia |
| SLL | 694 | 2 | Leone | Sierra Leone |
| SOS | 706 | 2 | Somali Shilling | Somalia |
| SRD | 968 | 2 | Surinam Dollar | Suriname |
| STD | 678 | 2 | São Tomé and Príncipe Dobra | São Tomé and Príncipe |
| SYP | 760 | 2 | Syrian Pound | Syria |
| SZL | 748 | 2 | Lilangeni | Swaziland |
| THB | 764 | 2 | Baht | Thailand |
| TJS | 972 | 2 | Somoni | Tajikistan |
| TMM | 795 | 2 | Turkmenistani Manat | Turkmenistan |
| TND | 788 | 3 | Tunisian Dinar | Tunisia |
| TOP | 776 | 2 | Pa'anga | Tonga |
| TRY | 949 | 2 | New Turkish Lira | Turkey |
| TTD | 780 | 2 | Trinidad and Tobago Dollar | Trinidad and Tobago |
| TWD | 901 | 2 | New Taiwan Dollar | Taiwan and other islands that are under the effective control of the Republic of China (ROC) |
| TZS | 834 | 2 | Tanzanian Shilling | Tanzania |
| UAH | 980 | 2 | Hryvnia | Ukraine |
| UGX | 800 | 2 | Uganda Shilling | Uganda |
| USD | 840 | 2 | United States Dollar | American Samoa, British Indian Ocean Territory, Ecuador, El Salvador, Guam, Haiti, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Panama, Puerto Rico, East Timor, Turks and Caicos Islands, United States, Virgin Islands |
| USN | 997 | 2 | United States Dollar (Next day) (Funds code) | United States |
| USS | 998 | 2 | United States dollar (Same day) (Funds code) (one source claims it is no longer used, but it is still on the ISO 4217-MA list) | United States |
| UYU | 858 | 2 | Peso Uruguayo | Uruguay |
| UZS | 860 | 2 | Uzbekistan Som | Uzbekistan |
| VEB | 862 | 2 | Venezuelan bolívar | Venezuela |
| VND | 704 | 2 | Vietnamese dong | Vietnam |
| VUV | 548 | 0 | Vatu | Vanuatu |
| WST | 882 | 2 | Samoan Tala | Samoa |
| XAF | 950 | 0 | CFA Franc BEAC | Cameroon, Central African Republic, Republic of the Congo, Chad, Equatorial Guinea, Gabon |
| XAG | 961 | . | Silver (one Troy ounce) | |
| XAU | 959 | . | Gold (one Troy ounce) | |
| XBA | 955 | . | European Composite Unit (EURCO) (Bonds market unit) | |
| XBB | 956 | . | European Monetary Unit (E.M.U.-6) (Bonds market unit) | |
| XBC | 957 | . | European Unit of Account 9 (E.U.A.-9) (Bonds market unit) | |
| XBD | 958 | . | European Unit of Account 17 (E.U.A.-17) (Bonds market unit) | |
| XCD | 951 | 2 | East Caribbean Dollar | Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines |
| XDR | 960 | . | Special Drawing Rights | International Monetary Fund |
| XFO | Nil | . | Gold franc (special settlement currency) | Bank for International Settlements |
| XFU | Nil | . | UIC franc (special settlement currency) | International Union of Railways |
| XOF | 952 | 0 | CFA Franc BCEAO | Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo |
| XPD | 964 | . | Palladium (one Troy ounce) | |
| XPF | 953 | 0 | CFP franc | French Polynesia, New Caledonia, Wallis and Futuna |
| XPT | 962 | . | Platinum (one Troy ounce) | |
| XTS | 963 | . | Code reserved for testing purposes | |
| XXX | 999 | . | No currency | |
| YER | 886 | 2 | Yemeni Rial | Yemen |
| ZAR | 710 | 2 | South African Rand | South Africa |
| ZMK | 894 | 2 | Zambian Kwacha | Zambia |
| ZWD | 716 | 2 | Zimbabwe Dollar | Zimbabwe |
- E = Number of digits after the decimal point.
