Forex market or trade forex is the largest and most heavily traded market in the world. In 2019, the forex market made a daily turnover of 6.6 trillion dollars. It is also the only financial market that is active 24 hours a day. Traders earn by trading currencies in the marketplace.
In this post, you’re going to learn about the top five most traded currencies all over the world. Let’s get straight into it!
The US dollar is the United State’s official currency. This currency is the most circulating and globally traded currency of all time. The US dollar is the top most traded currency in the trade industry. The average per day volume of the US dollar is 2.2$ trillion.
The reason behind the US dollar being the king of currencies is because it holds up the power of the US economy. It is also a significant element within the forex market for other currencies. This is because states consider the US dollar as a target rate to set a certain fixed exchange rate for their currencies along with a foreign currency, this is also known as pegging.
The US dollar is also considered as ‘Standard Currency’ for main commodities. For example oil, gold, and other valuable metals.
Euro is issued by the European Central Bank (ECB). The Euro is being currently used by 19 of the 27 ‘EU’ states, also known as the Eurozone. The value of the Euro is held by the economic and political development of the alliance. This currency is estimated to make up 20% of global reserves by volume approx. Euro is a trusted currency, running in the forex market. It makes a currency more liquid when it is traded with it. Mostly spectacular as a play on general health and its members traded Euro.
Japanese Yen is the official currency of Japan. It is the third most traded currency internationally. It has a daily volume of $550 million. It is issued by the Bank Of Japan.
The Japanese yen is also the third-largest reserve currency; it takes around 4.9% of the world’s reserves. The Japanese yen’s value is highly influenced by Japan’s economy, mostly the sectors such as the manufacturing sector. The value of Yen rises with the demand for products in the country. Oil is also a determining factor for the value of the Japanese yen. This currency is also a famous currency for forex traders because of the significant role it plays in the carry trade.
The pound sterling also called the Great British Pound is in the fourth number of highly traded currencies all over the world. This currency is also the fourth largest reserve currency on this planet. The pound sterling is the official currency of the United Kingdom and its regions. This currency is denoted by the symbol £. It is also the oldest independent currency to survive.
The estimated value of the British pound depends upon the government’s political stability and economy. The Pound Sterling is a significant standard for many states. This currency also has a high relative value and it’s a highly liquid currency in the market of foreign exchange.
The Australian dollar is the fifth largely traded currency globally. It’s the official currency of the Commonwealth of Australia. The approximate daily volume of this currency is around US$174 million. The Australian dollar is also the sixth major reserve currency. currency is the sixth most commonly held reserve currency.
The Australian dollar was introduced as a replacement for the Australian pound in 1966. The Australian dollar’s value is highly dependent upon the terms of trade and commodity prices. Changes in the prices and trading volume affect the AUD. Another thing on which AUD is dependent is the country’s foreign liabilities’ size.
There are more than 180 currencies on the entire planet. The oldest one is the British pound that is 1200 years old, roughly. Only 8 percent of the money exists as paper money all over the world.
Certain features impact a currency’s price and value as compared to the forex’s other currencies. If you want to be a forex trader learning about the elements that determine the value and strength of a currency is a must.