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Eight Most Traded Currencies

Published on 8 February 2017 in News - Pages by Raffick Marday

So what are the Eight Most Traded Currencies and the Reasons for their Popularity? The foreign exchange market is the globe’s biggest and most liquid trading market that trades trillions of dollars in any one day. Virtually all currencies can be traded on the Forex (FX) markets, but there are a few popular currencies that are more traded than others because of their high value and stability, which makes them attractive and preferable as trade mediums. Here is a list of the eight most traded currencies and their traits as well as reasons for their popularity as the most traded currencies.

The US Dollar
The US dollar is the most traded currency in the world because it acts as the major reserve currency. The USD is often found in pairs with virtually all major currencies where it acts as an intermediary in triangular transactions of currency sales and purchases. The USD is also widely traded because it is acceptable by virtually all nations and some nations even use it as their official currency. The dollar is also a determining factor in Forex markets where it acts as a benchmark for nations, which choose to peg their currencies on the USD’s value. The dollar is also a popular trading currency because it acts as the standard currency used to value most commodities such as precious metals and crude oil.

What are the Eight Most Traded Currencies

The Euro
The Euro is a relatively new regional currency used within the European Union region. But it has quickly picked up in the trading markets, and it has become the second most traded currency after the USD. It is also the second most preferred reserve currency in the world. The currency was introduced in 1999, and its coins and banknotes entered circulation in 2001. Just like the US dollar, other nations also peg their currencies exchange rate and value to the Euro to stabilise their rates. The Euro is a trusted currency and it adds great liquidity to any trading pair of currencies attached to it

The Japanese Yen
The Yen is the most traded currency from the greater Asian region. Its strength can be attributed to Japan’s strong manufacturing economy. The Yen grows in value and stability as the Japanese economy grows, and the currency is mainly used to evaluate the general economic health of the Pan-Pacific region.

The British Pound
The Sterling pound or British Pound is the 4th most traded currency in foreign exchange markets. The Sterling Pound also serves as a reserve currency because if it’s relatively high value and stability when compared to other currencies. The UK retains the use of the pound in spite of being in the Eurozone because of historic pride and the need to control UK interest rates.

Eight Most Traded Currencies

The Swiss Franc
The Swiss Franc is regarded as a neutral currency, just like Switzerland, which maintains a neutral policy and does not subscribe to militarism. It is thus often regarded as a safe-haven currency because it often has a negative correlation to highly volatile commodity currencies including the Australian and Canadian dollars. The Franc has little volatility and it trades in a relatively tighter range than most commonly traded currencies.

The Canadian Dollar
The Canadian dollar alternatively known as the �Loonie’ is perhaps the globe’s most traded commodity currency. The movements of the Canadian dollar in the markets are often in line with the commodity markets and popular commodities such as minerals, precious metals, and crude oil. Since Canada is a big supplier of commodities to the world’s largest economy – the United States – the movements of the Canadian dollar mostly correlate to the strength of the USD.

The Australian Dollar
The Australian economy has maintained a steady economic growth and stable prices through its fiscal policies and monetary policies passed by the Reserve Bank of Australia. The Australian dollar has been a focal point to carry traders because it provides higher yields than the seven major global currencies. It is also a commodity currency and it has a strong relation with commodities such as gold and silver.

The South African Rand
The South African Rand is a relatively volatile currency with a daily mean range of approximately 1000 pips. However, the wide range is not a downside because if translated to dollar pips, the range is nothing more or less when compared to the pound. This fact makes it a good currency to trade against the USD pair. The South African economy is a major commodity exporter of platinum and gold and the great mineral potential of the nation guarantee some relative currency stability that makes the Rand attractive as a trading currency.

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