It refers to an additional decimal place in the exchange rate. In the case of non-JPY pairs, we have 1.23456 rather than 1.2345, while in JPY pairs, we have 123.456 rather than 123.45. The last decimal place in such pricing is referred to as a pip fraction or tenth pip.

A fractional pip, also known as a "pipette," is a unit of measurement in the foreign exchange (forex) market that represents the smallest price move that a currency pair can make. Traditionally, a pip is the fourth decimal place in most currency pairs. However, a fractional pip extends this to a fifth decimal place, providing more precise pricing. For example, in EUR/USD, a move from 1.23456 to 1.23457 represents a one fractional pip movement. This increased precision allows traders to exploit smaller price fluctuations, improving trading accuracy and potentially enhancing profitability.