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Three Popular Currencies In The World

history July 19, 2018

local_library 0 minute read

1. The US Dollar

This is the most traded currency in the world. It’s impossible that the USD is found in a pair with other currencies. It works as the intermediary in currency transactions. The USD acts as the unofficial reserve currency held b central bank and institutional investment entity in the globe. Because the currency is accepted over the world, it is supposed to be an informal alternative form of payment.

The USD plays an important role in the foreign exchange rate market. Many other currencies fix or peg their currencies to the value of the USD. Countries change their exchange rates to the USD to keep the exchange rate stable.

2. The Euro

The euro is the second most traded currency in the globe and the world’s second-largest reserve currency. Nations in the European Union use the euro as the main currency. Many countries in Europe peg their currency to the Euro to stabilize their exchange rate.

The euro is prevalent in the foreign exchange market. It can be the most politicized currency traded in the forex market.  Some countries including Italy, Spain, and Portugal which used to have drastic fall in interest rate had to regulate the number of trading volumes for the euro.

 

3. The Japanese Yen

This currency is most traded in Asia. It is a proxy for the underlying power of Japan’s manufacturing-export economy. The yen is popular in forex circles for its role in the carry trade. Japan used to apply a zero interest rate policy for more 20 years. Traders borrowed the yen at no cost and invested in higher currencies. Because of its relationship with most traded currencies, the yen reinforces its value in the foreign exchange rate.

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