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FX101: 5 Most Traded Currencies

In Business and Currency by Continental StaffLeave a Comment

Here at Continental we supply over 160 currencies bought and sold immediately, from the well known to the obscure. Most of the time however, we’re asked to deal with the majors. We’ll take a look at the 5 most traded currencies, as well as recognize a few we believe are important to the foreign exchange market and global economy.

5. Australian Dollar (AUD)

australian_dollar

The Australian dollar is a popular one among traders for a variety of reasons. While the Australian economy is large, it is clear that the dollar is punching above its weight here with regards to trade quantity. High interest rates, relative economic stability (especially with other crisis around the globe), and a non-interventionist government all combine to make the ‘Aussie’ a potentially rewarding, yet sound investment. Despite the presence of other heavyweights in the Asia-Pacific region, the dollar is a popular reserve currency there, which boosts its market share considerably. While the strong US dollar has upended the markets somewhat, the Aussie usually remains relatively constant when compared to it.

4. Pound Sterling (GBP)

gbp_currency_used_in_the_UK

Until the 50’s, it was the Pound sterling which could claim the title of the ‘world’s reserve currency’. With the British Empire spreading to nearly every corner of the globe over the past few centuries, it should come as no surprise that the pound remains a popular (though not as much as before) currency in the FX market. The high value of the pound relative to the US dollar, euro, Canadian dollar, and really every other currency on the market makes it a somewhat expensive investment. However, the overall strength of the British economy and common use amongst Commonwealth countries around the world ensure the pound will always be an important currency. Along with the next three currencies, the pound is included as a part of the ‘basket’, which forms the basis of the IMF special drawing rights.

3. Japanese Yen (JPY)

japanese_yen

China may have passed Japan as the world’s second largest economy, but the yen still claims a much larger share of the FX market than its neighbour’s counterpart. A lot of this goes back to the 80’s and 90’s, when the world thought that Japan was poised to be a possible superpower on par with the United States. While the economy remains strong, Japan never reached the heights many predicted – but the effects of the mindset are still felt in the yen. With Japan reliant on trade and rapidly expanding, foreign markets started gobbling up the country’s currency as its value skyrocketed against the US dollar. The interest rate is low, but short-term gains (or losses) can be very volatile.

2. The Euro (EUR)

euro_coins_banknotes_economic problems in Europe_eurozone crisis

Definitely the most unique currency on our list, the euro claims second place through sheer volume. As the official currency of nineteen different countries, the daily usage and amount of money circulated of the euro is greater than even the US dollar. While it’s definitely the newest currency here, it has enjoyed unsurpassed growth since its 1999 introduction. Of course, you can’t mention the euro nowadays without talking about its economic problems. Beyond the current Greek crisis, other struggling countries have dragged the value and attractiveness of the euro down over the last few years. That being said, any currency used in Germany and France (among many others) is always going to be a popular investment.

1. US Dollar (USD)

us_dollar

It shouldn’t come as any surprise that the most traded currency is the US dollar. Ever since the end of World War II when diplomats from all over the free world sat down at the Bretton Woods conference and decided how the world economy would work, the dollar has been at the forefront of the FX market. Though the resulting system (which tied the value of the dollar to gold and the value of all other currencies to the dollar) is obsolete – the greenback is still the currency to which all others are judged. Why is it so heavily traded? You can point to the economic strength of the US, the fact that most countries hold dollars in reserve, many economies inextricable links with America, or maybe just that the standard size lets large sums fit easily in a briefcase (the last one is probably not a make or break factor). All told, the US dollar is here to stay and will continue to be a popular investment.

Honourable Mentions

While not the most traded currencies in the world, these still have a large impact on the foreign exchange market or are growing in importance in the global economy. These include the Swiss franc, Canadian dollar, Chinese yuan, Hong Kong dollar, and the Indian rupee.

Looking to buy any of these currencies? Visit or call your nearest branch today for our current exchange rates. While these might be the most traded currencies in the world, we also offer a wide array of minors and exotics – so we’ve got you covered no matter where you want to go!

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