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The World’s 10 Most Traded Currencies

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The World’s 10 Most Traded Currencies

Reserve currencies like the US dollar and the Japanese yen are common forex trading.

Currency trading or forex trading is a lucrative business that involves exchanging money between millions of people, businesses and organizations. The transactions can be as simple as exchanging a few dollars for the local currency during travels. Similarly, forex can be as complicated as investing in large businesses or investing in foreign bank accounts.

The Birth Of Forex Trading

via fxstreet.com
Coins used to be set under gold.In the 20th century, countries fixed their money to the gold standard. This meant that a country’s currency was directly linked to its gold value. The system was popular because the gold-backed currency was less likely to impair the exchange rates of inadequate individuals.

However, Britain stopped using the gold standard in 1931, and the USA did the same two years later. Governments have developed what is called the fiat system. Instead of giving money backed by a tangible asset such as gold, money is now backed by the government. These changes affected the interaction of international markets with each other.

Globalization, travel and the Internet have made it easier for people to invest in other countries. Although all currencies serve their purpose, there are ten currencies that are more popular than others. They are used for different reasons, and the basic understanding of these currencies can help you better understand other types of currency.

New Zealand Dollar

via dailyfx.com
The New Zealand dollar is usually traded with the Australian dollar.The New Zealand dollar (NZD) is the official currency of the islands of New Zealand, Pitcairn, Cook, Tokelau and Niue and is often replaced by the Australian dollar or US dollar. NZD was first fixed for the British pound, and then the currency was fixed to the US dollar until it stood on its own. Due to its relationship with the USA, NZD is vulnerable to changes in interest rates set by the U.S. Federal Reserve. In addition, the cost of milk and the number of tourists often increase the value of NZD.

Hong Kong Dollar

via asia.nikkei.com
The Hong Kong dollar was fixed in USD in 1972.Hong Kong was once a colony of Great Britain and the first currency systems were an indication of the old colony’s relationship with England. In 1863, the British Crown founded a mint that would only make money for Hong Kong, but printed coins that were not popular with locals. Hong Kong used the Japanese yen as the currency during World War II, when the Japanese invaded China, and the yen defeated the II. It was illegal to use at the end of World War II. In 1972, the Hong Kong dollar was officially fixed to the US dollar. The World’s 10 Most Traded Currencies, Which is the most traded currency across the world?,What are the 8 major currencies?,What are the best trading currencies?,What is the safest currency in the world?,Which currency is most stable?,Should I buy or sell GBP USD?,How many world currencies are there?,Is Bitcoin a currency?,How much is 1 euro to 1 US dollar?,What was used before money?,How do I trade forex?

Chinese  Renminbi

via marketplace.org
Yuan fluctuated due to political conflicts.Mainland China’s currency confuses people who are not experienced in forex trading because it goes by two names: yuan and renminbi. Investopedia mentions that yuan refers to an account unit, but banks discuss transactions in terms of renminbi. It also experienced some ups and downs due to political conflicts with countries that accused the Chinese currency of keeping the values artificially low to encourage trade. However, the International Monetary Fund (IMF) stated that renminbi will be one of the reserve currencies by 2016.

Swiss Franc

via https://www.pymnts.com/
The Swiss franc is the legal currency of Switzerland.The Swiss Franc is the legal currency of Switzerland and was launched in 1850. At that time, it is fixed to the value of gold. It is popular to buy the Swiss franc in times of economic distress, as it is considered a stable currency. Today, the Swiss franc is often replaced by the euro, the US dollar, and the British pound.

Canadian Dollar

via https://www.thecanadianencyclopedia.ca/
The Canadian dollar is largely traded against the US dollar.Canada is one of the UK’s Commonwealth countries, but in 1817 it stopped using British pounds. This was a reaction to the strengthening ties and growing economic power with the United States. Nevertheless, the country was divided on this issue, and several provinces had their own currencies until the 1858 law made the Canadian Dollar the only legal tender in the country. Today, the Canadian dollar is one of the top ten most traded currencies.

Australian Dollar

via fxstreet.com
Australia started using the Australian Dollar in 1966.XE explains that the British pound was Australia’s official currency until 1910, when the country created its own currency, the Australian pound. The old currency was fixed to the British Pound and the country moved to the Australian Dollar (AUD) in 1966. Due to its high value and stability, it is the fifth most popular banknote now exchanged. The value of AUD has made it a target for imitators, so the Australian government designed polymer notes in 1988 to reduce the possibility of counterfeit production.

Pound Sterling

via theculturetrip.com
The British pound was launched in 1971.Great Britain has existed for centuries, but the British pound was introduced to the country in 1971. Currency is important because its value tends to be stable, which allows investors to have easier time to make decisions because there is little risk in trading. Countries around the world tend to keep the pound at a high rate and are considered a safe reserve currency.

Japanese Yen

via fxstreet.com
The yen is a major reserve currency, and it is often traded against the USD.

Japan’s national currency is a behemoth in Asia, and investors often observe the state of the yen to get a better perspective on Asia’s economy as a whole. Professional investors also use the yen as a carry trade. Japan is known for its negative interest rate policy, and thus many investors buy yen and later exchange it for currencies that are more valuable, allowing them to make a profit on excess interest. Though the USD is the world’s currency, the status of the yen means it is Asia’s currency.

Euro

via wikipedia
The euro is a major reserve currency.Although the euro is relatively new, it is the second most popular currency in the world. The European Union decided to introduce the euro in 1999, but its currency was not fully accepted until 2002. It quickly became a stable currency, and many countries near the European Union fixed their currencies to the Euro because of their value.

The US Dollar 

via https://www.moneyway.com/
USD is the official currency worldwide.The most traded currency in the world is the US dollar. The US dollar became the world’s currency just before the start of World War I. His position became official during the 1944 Bretton Woods Agreement. This created a new financial system in which the US dollar will become an official currency worldwide.

US Dollar Strength

President Richard Nixon ended the practice of using dollars for gold because he wasn’t sure if the United States had enough gold for all countries that might want to change their dollar reserves one day. In 1973, countries were given the option to fix their money to other strong currencies. However, the US dollar is strong, which explains its appeal as a reserve currency for governments around the world.

The World’s Ten Most Traded Currencies

Rank Currency ISO 4217 code (symbol) % of daily trades (bought or sold) (April 2019)
1  United States dollar USD (US$) 88.3%
2  Euro EUR (€) 32.3%
3  Japanese yen JPY (¥) 16.8%
4  Pound sterling GBP (£) 12.8%
5  Australian dollar AUD (A$) 6.8%
6  Canadian dollar CAD (C$) 5.0%
7  Swiss franc CHF (CHF) 5.0%
8  Renminbi CNY (元) 4.3%
9  Hong Kong dollar HKD (HK$) 3.5%
10  New Zealand dollar NZD (NZ$) 2.1%

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