The most used trade currencies in the forex market
When it comes to trading markets, the forex market is the biggest one in the world. Investors that wish to become familiar with it need knowledge of the trading currencies available in the world. Getting to know the different currencies and their value will help you in your forex market investments.
The trade currencies used more frequently
The forex market is the wider in the world. The word forex stands for exchange, which defines the nature of this market perfectly. Millions of transactions are done in the forex market every day, making up to trillions of dollars investments. By consulting pages like Eagles Investors we can keep up with the latest inflation news regarding the forex market.
Most of the forex market trading happens on big financial hubs located in the United States, Japan, United Kingdom, Switzerland, Hong Kong and Singapore. Because of this, it is not surprising that among the most used currencies we can find the ones these countries use. On top of the chart we can find the dollar as the stronger currency at the moment.
The dollar: the most used currency
Thanks to the stability of the US government and the economic vitality that the country has been experiencing over the last years, the dollar has become the most used currency in the forex market. The dollar is also the most used reserve currency in the world. Dollars are detained by the government in large quantities with the purpose of being used in foreign exchange funds.
The dollar usage is so extended that a new movement has been developing on foreign markets: the dollarization. This means that foreigners use the dollar currency instead of their local ones. This is often done in order to protect investments from the local currency inflatations. A similar event happens with countries like the one from China. China uses the dollar as a benchmark currency, fixing their currency rates to match the dollar ones.
Since its introduction in the markets back in 1999, the relevance of the euro has been growing non stop, making it the second most used currency in the world and the second reserve currency. The euro is used by 22 different countries in the Eurozone. Because of this, speculators decide to base their euro investments on the Eurozone health. Economic and political events that happen on these countries often reflect on the value of the euro. Many European countries outside the eurozone and a few African ones fix their exchange rates to match those of the euro.
The Japanese Yen
While the dollar is the most used currency in America and the euro the most used one in Europe, the Yen leads the currency trade ratios in Asia and it is the third most used currency in the world. Thanks to this, the manufacturing and exportation industries of Japan have been developing at a great peace over the last decades. The Japanese yen has remained strong in times of financial crisis, making it a smart investment for those who seek stability. Especially when compared with other currencies in the Pacific region like the ones from South Korea, Singapore or Thailand.
The british pound
Forth in the ranking of the most used currencies in the forex market we can find the United Kingdom with the British pound. Also known as the pound sterling, this currency used to be among the stronger ones in the world. However, the fall of the British empire and the quick raise of the euro made it lose its spotlight, although it still remains relevant.
The United Kingdom is part of the European Union at the moment, but they did chose to retain their own currency. This was due to a sense of patriotic pride in their currency and to avoid domestic inflations in the interest rates.
The british pound is one of the currencies with the higher cost, which makes it a benchmark currency for many nations.