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In finance, specifically in foreign exchange markets, a percentage in point or price interest point is a unit of change in an exchange rate of a currency pair.
The major currencies are traditionally priced to four decimal places, and a pip is one unit of the fourth decimal place: for dollar currencies this is to 1/100 of a cent. For the yen, a pip is one unit of the second decimal place, because the yen is much closer in value to one hundredth of other major currencies.
In the forward foreign exchange market, the time value adjustment made to the spot rate is quoted in pips, or FX points or forward points.
A pip is sometimes confused with the smallest unit of change in a quote, i.e. the tick size. Currency pairs are often quoted to four decimal places, but the tick size in a given market may be, for example, 5 pips or 1/2 pip.