Currency Transactions

What is Parity?
Parity refers to the ratio of the currencies of two countries to each other. The interest rates of the country's currencies and the economic conditions of the countries can be counted as the factors affecting the parities. For example, the EURUSD (Euro-Dollar parity) parity is of great importance in terms of Turkey's foreign trade balance, since most of its exports are in Euros and a large part of its imports are in US Dollars. 

What are the factors affecting parity?
Political and economic developments in countries are the factors that have the greatest impact on that country's currency. If there is political and economic stability in a country, that country's currency appreciates. Instability results in depreciation of the country's currency. In addition, as you can see in our economic calendar, monthly and weekly data on the economic outlook of countries also cause short-medium-term effects on the currencies of the countries. 

Major Pairs
We call the parities formed by the most traded currencies in the world as major parities. As an example, we can give EURUSD, USDCHF, USDJPY, GBPUSD parities.

Minor Pairs
Minor pairs are pairs formed by a major and a minor currency. Minor pairs are generally in demand locally. We can give USDTRY, EURTRY parity as an example of minor parities.

Exotic Pairs
They are the pairs with the lowest share in the total trading volume followed by local investors.  

How is Parity Calculated?
Parity is the ratio of two different country currencies to each other. In this context, we can reach the price of a new parity by using two different parities. 

Euro\Dollar: 1.10 Sterling\Dollar: 1.50;
By dividing these two parities ( Euro\Dollar / Sterling \Dollar ) we can reach the value of 0.7333, that is, the price of the Euro\Sterling parity.