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The U.S. dollar is the most traded currency in the world not only because it is widely accepted in other countries, but because it serves as the unofficial global reserve currency. The scale on which a currency is used marks the possibility that the country is perhaps, leading to become bigger and a world super power. Therefore, we brought you a list with top 10 most used currencies in the world. These currencies are having said to be the maximum contributor in world’s daily transactions and the world trade. The U.S. dollar, which is sometimes called the greenback, is first and foremost in the world of forex trading, as it is easily the most traded currency on the planet. In the fourth quarter of 2016, the Chinese renminbi became another one of the world’s reserve currencies.

Finally, it is worth noting that the cost of oil can play an important role in determining the yen’s value. This is because Japan is a major importer of oil and high prices can weigh heavily on its economy. A spot exchange rate is the rate for a foreign exchange transaction for immediate delivery. One other feature of the U.S. dollar is that it is used as the standard currency for most commodities, such as crude oil and precious metals.

History of Forex Trading

If you’re new to forex trading, you can open a demo account to practise in a risk-free environment with £10,000 in virtual funds. This will also give you access to IG Academy where you can learn how to analyse and trade currency pairs. The euro is the official currency of the European Union and the second most traded globally, accounting for a daily average volume of nearly US$1.1 trillion.1 It is issued by the European Central Bank . The forex market is the biggest market in the world, accounting for an average of $6.6 trillion worth of trades each day. Here we take a look at the top 10 most traded currencies, which are involved in nearly 90% of trades. Every currency has specific features that affect its underlying value and price movements relative to other currencies in the forex market.

The Forex market is the largest and most liquid asset market on earth.5BIS, “BIS Quarterly Review”, accessed June 27, 2020. The expenses of WW1 meant that countries had to start printing large amounts of money that weren’t backed by gold – this led to inflation, and the eventual abandonment of the gold standard in 1931. Although the broader market has experienced a variety of unexpected, negative effects due to the COVID-19 pandemic, the Forex market has remained relatively unscathed – at least for now. In fact, the volume of trading has increased due to the volatility that the pandemic has brought on.

Eventually, the budget and trade deficits of the US, as well as its dwindling gold reserves, led president Richard Nixon to abandon the Bretton Woods system in 1971. By 1973, the modern form of Forex trading had already taken shape. Hong Kong was once a colony of Great Britain, and its early currency systems are indicative of the former colony’s relationship to the UK. In 1863, the British Crown established a mint that would make money just for Hong Kong, but it minted coins that were unpopular with locals. However, the United Kingdom stopped using the gold standard in 1931, and the US did the same two years later.

List of the 20 most traded currencies

“The Swissie” is a combination of the US dollar and the Swiss franc. For many years, the financial stability of Switzerland has been used as a ‘safe haven’ for investors of the forex market, who will rely on trading the CHF in times of market volatility. Therefore, this is a popular forex pair for traders when the economic or political situation of a region is uncertain. As the value of the CHF strengthens against the USD due to increasing investment, the price of this currency pair starts to drop.

Therefore, the currency’s volatility is up to 35 pips per day. All forex traders are aware of the powerful relationship between the European currency and the Swiss franc. The main reason for this relationship is the influence mtrading review of the US dollar and the US economy. Transactions of currency pairs containing the Euro are more common in the London or the US markets. The USD/AUD pair, popularly known as Aussie, made up 5.4% of transactions last year.

Issued by the Hong Kong Monetary Authority , the Hong Kong dollar accounts for 3.5% of global forex trades. Its average daily trading volume is around US$117 billion. The HKD is used in Hong Kong as well as Macau. The economy of Hong Kong has been going through tough times in recent years due to the massive pro-democracy protests.

Other statistics on the topicFinancial markets in Australia

The Swiss franc is the legal tender of Switzerland and Liechtenstein. Issued by the Swiss National Bank, its average daily trading volume is around $165 billion. The Swiss franc accounts for 5% of global forex trades. It is often considered a safe haven currency. Nearly half of Switzerland’s foreign trade takes place with members of the European Union.

The foreign exchange market is the largest and most liquid market on Earth. We’ve compiled a list of important, up-to-date, actionable statistics regarding Forex trading so that you know what you’re getting into if you choose to trade Forex. In 1973, countries were given the option to peg their currency to other stronger currencies. However, the US dollar remains strong, which explains its appeal as a reserve currency for governments around the world. The 1944 Bretton Woods agreement kickstarted the dollar into its current position.

Check out our article about the USD vs the Yen to find out if the Yen is stronger than the US dollar. The value of the US Dollar gets influenced by various factors such as the economic performance of the US market and the rise and fall of other markets where the US Dollar is used. Most international transactions are done in US$. This makes it the most dominant and the most used currency in the world market. Therefore each trade is counted twice, once under the sold currency ($) and once under the bought currency (€). The percentages above are the percent of trades involving that currency regardless of whether it is bought or sold, e.g. the U.S.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. The euro may be the most “politicized” currency actively traded forex coinbase in the forex market. The official currency of the majority of the nations within the eurozone, the euro was introduced to the world markets on Jan. 1, 1999, with banknotes and coinage entering circulation three years later. The Forex markets are some of the biggest and most liquid in the world, with a total daily average trading volume of USD 5.1 trillion in April 2016, according to the Bank For International Settlements .

Some of Canada’s biggest are oil and timber, with one of the main factors influencing the Canadian Dollar’s value is the oil price. For this reason, the Canadian Dollar sits in a basket of currencies referred to as commodity currencies. Issued by the Bank of England, the Pound is an iconic currency that plays an integral part within London’s institutional forex trading Hub.

Japanese Yen

It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Turnover in HKD doubled between April 2016 and April 2019, taking the currency from 13th in the global rankings to ninth. This increase in trading volume is likely the result of the uncertainty surrounding the political situation in Hong Kong, which has increased the volatility of HKD pairs and created opportunities for profit. As China is a major exporter of commodities and manufactured goods, the value of the renminbi depends heavily on the country’s terms of trade, particularly with major trading partners such as the US and Europe. As a result, Trump’s trade war and its effects on US-China relations and international trade in general could have a big effect on the renminbi in the coming months and years.

Although FX trading has been an important part of the larger banking system for centuries, this area has long been inaccessible to the individual. The Japanese Yen drives the global carry trade. Investors borrow Yen at low-interest rates and re-invest in higher-yielding currencies offshore. By doing this, they lock in higher interest profit on their investment than what they’re paying on loan. The Japanese Yen is the official currency of Japan and closes our list of the top 3 most traded currencies in the world.

According to the Bank for International Settlements, the Euro accounts for a daily average volume of upwards of $800 million. However, the fact they denominate volume in USD highlights the Euro’s number 2 status. The official currency of the United States of America, the US Dollar, is also the world’s primary reserve currency. The Seychellois Rupee trades at around 20.91 SCR for 1 USD.

The Chilean peso is the official currency of Chile and is issued by the Banco Central de Chile, the nation’s central bank. The foreign exchange is the conversion of one currency into another currency. The euro has become the second most traded currency behind the U.S. dollar. Same goes for those who make currencycarry trades. This method focuses on the rate differential between the 2 currencies with the aim of making profits based on said difference, as opposed to trying to get the best entry and exit points possible.

The Australian Dollar is known primarily as a commodity currency. This is due to Australia being a major exporter of commodities such as coal and iron ore. As a result, commodity prices and global demand strongly influence the price of the Aussie. Issued by the European Central Bank, the Euro is the official currency of 19 members of the EU, allowing simple cross-border transactions.

Africas Most Traded Currencies in 2020

The UK’s own currency, the Pound Sterling, comes in at third place – with 17% of trades having the Pound at one side.64Bank of England, “BIS Triennial Survey of Foreign Exchange”, accessed June 30, 2020. Sales desks in five countries – the UK, the US, Hong Kong SAR, Singapore, and Japan, accounted for 79% of all forex trading.49BIS, “Triennial Central Bank Survey”, accessed June 29, 2020. Although it is already immense, the forex market hasn’t slowed down or become sluggish. Some forecasts, such as the one from the IMARC group, predict a compound annual growth rate of 6% in the next five years.4BIS, “BIS Quarterly Review”, accessed June 27,2020. Forex trading as we now know it began in 1973, after the collapse of the Bretton Woods system, which tightly regulated exchange rates. However, Forex trading has existed in one form or another for a very long time – just about as long as humans have used coinage.

The Aussie, much like the Cable, has remained quite stable in the last three years – in 2016, it accounted for 5.2% of trades.43BIS, “Triennial Central Bank Survey”, accessed June 29, 2020. The forex market dwarfs even the largest stock exchanges in the world – for example, Nasdaq has a daily volume that averages around $200 billion. Global GDP in 2019 amounted to roughly 142 trillion dollars – meaning that the annual turnover of the forex market is almost 17 times larger.2BIS, “BIS Quarterly Review”, accessed June 27, 2020. We don’t claim to know for certain, of course – but today’s technological advancements are already beginning to have an effect on the Forex market.

The Japanese Yen

The next closest reserve currency is the euro. It makes up 20% of known central bank foreign currency reserves. Switzerland’s official currency gets issued by theSwiss National Bank. It is the seventh most traded currency in the world, and it accounts for a daily average trading volume of approximately US$164 billion. The British Pound to US Dollar currency pair is also known as ‘Cable’ due to the fact it was the first currency pair to be traded via telephone lines, or cables that crossed the Atlantic Ocean. The United Kingdom and the United States are two of the largest western economies and share very strong trade relations.

Crypto Trading Diary

However, the ongoing uncertainty that stems from the UK’s plans to exit the EU (“Brexit”) has led to greater volatility in the GBP/USD. The pound is also very heavily traded against the euro, reflected in the EUR/GBP forex hedging techniques cross pair.Click here to start trading CFDs on GBP/USD now. Another major currency pair is the USD/JPY. The US Dollar to Japanese Yen currency pair is the second most commonly traded pair after EUR/USD.

It’s involved in 88.3% of global forex trades, and has a daily trading volume of $2.9 trillion. Issued by the US Federal Reserve, it is the most powerful currency out there. The US is the world’s largest and one of the most stable economies, which has helped the dollar become the world’s dominant currency. The USD/EUR is the third most common currency pair in the Japanese market, representing 9.2% of all trades.