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quote currency interest rates

In a currency pair, the quote currency interest rate is the interest rate set by the central bank that issues the quote currency.

In FX markets, currencies are quoted in relation to other currencies and represented in pairs. In the EUR/USD pair, for instance, the euro is the base currency and the dollar is the quote currency, so in this example, the quote currency interest rate is the rate set by the US Federal Reserve.

Interest rates are a fundamental element in currency forward contracts. The differential between the interest rates of the base and quote currencies defines the forward points that are added or subtracted to the exchange rate to determine the forward rate.