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Currency Codes & Symbols
Whether considering investing in foreign currency or merely looking up currency conversion rates, the symbol used to denote a currency isn't all that is required. The dollar sign, $, is used by Australia, Canada, and the United States, or example. Knowing the exact currency code will ascertain which currency is in question or, in investing terms, in play.
The most commonly used and more easily identified currency code structure uses ISO 3166, two-letter country code and a third alpha character for the currency used.
For example, Australia's ISO 3166 alpha country code is AU. Its currency is the dollar. Therefore, the three-character code for Australian currency-its currency code-is AUD.
Every country has a two-letter code, but not every country uses independent currency. The European Union comprises several European countries with individual country codes, but they all use the same currency, the euro.
Spain, for example has a country code of ES. Its currency used to be the Peseta. Before the country adopted the euro, its currency code was ESP. However, since conversion, it-along with every member of the European Union-notes a currency code of EUR, denoting only the euro.
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Numerical Currency Codes
Most people are not aware there are three-digit currency codes. In typical live venues, the numerical codes are not visible and are rarely mentioned in trading publications or newspapers. They do, however, have value and importance.
Each numerical code designates not just a country and monetary system, it also can denote financial transactions that are based on non-monetary modes of trade, such as gold or silver. There is even a numerical code for 'not otherwise listed.'
The primary difficulty in using numerical codes is that the exact number sequence must be accurate to correctly annotate the currency designation. If either a digit or a sequence is incorrect, erroneous information is presented.
Alpha currency codes are more commonly used because of that.
Three-digit currency codes specify transaction currencies, and not all transactions involving modes of currency involve a country's monetary system. Accuracy is imperative and often confusing. The Australian dollar's numeric currency code is 036, for example, but 360 denotes Indonesia and the Rupiah.
Alpha codes denote currency designations. The ending letter D is for dollar, but there's a difference between the Australian dollar and the New Zealand dollar, respectively represented as AUD and NZD. The simplicity of the alpha currency codes is a primary impetus in its common use.
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