The term PIPO is used to define the change in value between two foreign exchange y literally means percentage point. Specifically, PIPO defines the minimum possible variation in the value of a currency pair.
Most of the major currency pairs have a value that is expressed to four decimal places. PIPO means that the value of a currency pair has undergone the least possible variation in its priceIn other words, the last of those four decimal places has changed its value by one, both up and down, so PIPO would mean an increase or reduction in the price of a currency pair of 0,0001.
Use and uses of the PIPO value
Although the vast majority of currencies have a value to four decimal places, it is also true that some currencies such as the Japanese YEN have a value that is expressed to only two decimal places. In these cases the minimum variation in its price or PIPO will determine a variation of the second decimal place.
This means that the size of the PIPO varies depending on the type of currency used, although in any case a PIPO always defines the same thing: a minimum movement equivalent to one point.
The PIPO value is especially useful when converting currencies, but is also used in reference to various types of currency. financial products and investment to refer in the same way to the minimum possible variation in its value.
As with currencies in other financial products, the PIPO value varies depending on the type of product. Thus, for example, in the case of fixed income, the PIPO value is 0,005. In the case of shares, the PIPO value is 0,01 or 0,001.