Põhivaluuta

Põhivaluuta, meaning "base currency" in Estonian, refers to the primary currency of a country or economic region. It is the unit of account used for most domestic transactions, accounting, and economic reporting within that territory. The põhivaluuta is typically issued and managed by the central bank of the respective country. Its value is determined by a combination of market forces, economic policies, and sometimes government intervention.

When engaging in foreign exchange, one currency is always considered the base currency and the other the quote currency. The exchange rate indicates how much of the quote currency is needed to purchase one unit of the base currency. For example, in the EUR/USD pair, the Euro is the base currency and the US Dollar is the quote currency. Changes in the economic performance, interest rates, and political stability of the country issuing the põhivaluuta can significantly influence its exchange rate against other currencies. Central banks often intervene in currency markets to manage the value of their põhivaluuta, aiming to maintain price stability or support export competitiveness. The strength or weakness of a põhivaluuta can have widespread economic implications, affecting trade, investment, and inflation.