According to the Bank for International Settlements, the US Dollar or USD is the most popular and traded currency right now and has been for years and years. Official numbers tell us that it apparently accounts for an average volume of $2.2 trillion, each day. Forex trading, on the other hand, works in pairs and we already know that some of the most traded currency pairs also include USD. However, in this article, we will quickly go over some of the most traded currencies individually and we will provide a short analysis for each of them, so you can grasp a better understanding of how things work.
The US Dollar (USD)
This is the official currency of the United States, as everyone probably knows, and represents the main reserve currency of the whole world. It is also the most traded currency ever with 87% of all trades involving it. Commodities, such as gold, are also priced in the US Dollar when involved in trades. The pair involving the Dollar and gold is found on forex trading platforms as XAU/USD.
The Euro (EUR)
As the second most traded currency in the world, the Euro is the official currency in 19 out of the 27 European Union member states. When the EU was first created, only twelve countries used it. It is issued by the European Central Bank and, according to the Bank for International Settlements, it accounts for an average volume of more than $800 million, per day. As you can see, volume is counted in USD, once again highlighting the fact that the EUR is the second most important and traded currency in the world. Probably the greatest advantage of the EUR is its ability to facilitate simple cross-border transactions.
The Japanese Yen (JPY)
As the official currency of the state of Japan, the Yen is the third most important and traded currency in the world right now. It has a daily average volume of over $550 million, and it accounts for 4.9% of the total currency reserves in the world. Its name came from the translation of the word “yen” which means “circle”, reminding people of a coin. It is one of the safest currencies to trade because of the extremely low-interest rates in Japan. It also has a high trade surplus and a very low debt.
The Great British Pound (GBP)
This is the official currency of the United Kingdom and all of its territories and it is also known as the Pound Sterling. It’s interesting to note that the UK is the biggest Forex trading hub, with the London trading session making up for more than 40% of the daily turnover. It is also the oldest independent currency in the world, dating back to Anglo-Saxon England. It is the fourth most important currency in the world and it’s issued by the Bank of England. Its average daily turnover is more than $325 million but with the recent Brexit situation, it remains to be seen where will GBP stand in the near future.
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