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Most Traded Currencies
Additionally, it is noteworthy that their order may change in response to a shift in financial situation. Nevertheless, the above currencies remain often ranked on high volumes of trade and world importance.
The top 10 most traded currencies, which are involved in nearly 90% of trades. The U.S. dollar, sometimes called the greenback, is first and leading in the world of forex trading, as it is easily and the most traded currency globally.
How to trade Most Traded Currencies?
You can gain exposure to the top 10 currencies by trading currency pairs such as CFDs and spread betting. These allow you to:
- Speculate on price movements in any direction. Go long or short without taking ownership of the underlying currencies
- Increase your exposure with leverage. Open a position by depositing only a small deposit, known as a margin.
- Trade with efficient taxes. Profit from a spread bet, and you won’t pay any tax, while losses for tax purposes may offset earnings from CFD trading.
If fresh to forex trading, you can open a demo account to practice in a risk-free environment with £10,000 in virtual funds.
Most Traded Currencies – Below are the most trading currencies:
- The U.S. dollar
Currency symbol: $
The U.S. dollar, sometimes called the greenback, is first and leading in the world of forex trading, as it is easily and the most traded currency globally.
The U.S. dollar can be set up in a currency pair with all other major currencies and often acts as an intermediary in triangular currency transactions. This is because the dollar is the unofficial global reserve currency that nearly all central banks and institutional investment firms hold.
Also, due to the global acceptance of the U.S. dollar, some countries use it as an official currency rather than a local currency, a practice known as dollarization. The U.S. dollar may also be widely accepted in other nations, acting as an informal alternative payment, while those nations maintain their official local currency.
The U.S. dollar is also an essential factor in the exchange rate market for other currencies, where it can act as a reference or goal rate for countries that choose to peg or peg their currencies to the dollar’s value.
Very often, countries will peg their currencies to the U.S. dollar to stabilize their exchange rates rather than allow free (forex) markets to drive up the relative value of the money.
Another feature of the U.S. dollar is that it is the usual currency for most merchandise, such as crude oil and precious metals. Therefore, these commodities are subject not only to fluctuations in value due to fundamental economic values of supply and plea but also to the relative worth of the U.S. dollar, with prices susceptible to inflation and U.S. interest rates, which can affect the dollar’s value.
- The Euro
Currency symbol: €
The euro is now the second most traded currency behind the U.S. dollar. The official money of most nations within the Eurozone, the euro, came out to world markets on January 1, 1999, with notes and coins entering circulation three years later.
In addition to being the official currency of most eurozone countries, many nations in Europe and Africa pin their currencies to the euro for the same reason currencies are pegged to the U.S. dollar: to steady the exchange rate. As an outcome, the euro is also the second largest reserve currency in the world.
Since the euro is a widely used and trusted currency, it prevails in the forex market and adds liquidity to any currency pair you trade. Speculators commonly trade the euro as a stake in the general health of the eurozone and its member countries.
Political events within the eurozone may also lead to large volumes of euro trade, especially relative to nations that saw their local interest rates fall sharply at the time of the euro’s creation, particularly Italy, Greece, Spain, and Portugal.
As a result, the euro may be the most “discussed” currency actively traded on the foreign exchange market. On the other hand, the U.S. dollar is the leading currency in the foreign exchange markets. Measured by volume, the eight most common currency pairs involve the U.S. dollar.
- The Japanese Yen
Currency symbol: ¥
The Yen is the most popular Asian currency. It is seen by many as an indicator of the underlying strength of Japan’s manufacturing and export economy. As Japan’s economy goes, so does the Yen (in some respects).
Forex traders also watch the Yen to gauge the overall health of the Pan-Pacific region. Considering economies like South Korea, Singapore, and Thailand, as those currencies are traded much less on global currency markets.
The Yen is also well known in currency circles for its part in the carry trade. The strategy involves borrowing the Yen at almost no cost . Also investing in other, higher-yielding currencies worldwide, pocketing rate differentials.
With the carry trade being such an essential part of the Yen’s presence on the international stage, the constant indebtedness of the Japanese currency has made appreciation a problematic task. Although the Yen still trades on the same fundamentals as any other currency. Its relationship with international interest rates, especially with the most widely traded currencies.
- British Pound (GBP)
Currency symbol: £
The pound sterling, or pound sterling, is the world’s oldest currency. Rising to world dominance during the British Empire, the coin lost its number one position .After 1918, when colonial independence and war debts hit the U.K. economy.
At 6.4% of daily currency volumes, the British pound is now the fourth most traded currency in the world. It sits with the U.S. dollar, euro, Yen, and renminbi in the currencies. The IMF uses to calculate loans to nations needing financial support. Generally, along with the U.S. dollar and the euro, the pound still maintains a strong presence.
- Australian dollar (AUD)
Currency symbol: $, A$
Representing nearly 4% of global currency volumes, the Australian dollar rounds out the top five world currencies. Mostly paired with the U.S. dollar and Yen, the A$ replaced the Australian pound in 1966. As a result, the currency retains an unrivaled financial hegemony in the oceanic region. So, it is helpful in trade in fuel ore and minerals in gross and won.
- Canadian dollar (CAD)
Currency symbol: CA$
The Canadian dollar ranks sixth in the world’s top ten most-used currencies. Representing 2.5% of world currency trade, the CAD is a regional reserve currency. Due to Canada’s relative economic strength, the Canadian government’s powerful sovereign position, and the stability of the country.
Canada and CA$ act as barometers of U.S. economic activity, providing information that may not be visible through direct observation. As a store of value, the Canadian dollar currency pair is primarily USD.
Hence, the U.S. is the most traded currency globally, accounting for a daily average volume of US$2.9 trillion. There are several reasons for its popularity. Firstly, the U.S. is the world’s largest economy and a powerhouse in international trade.