There are eight major currencies in the world today. The largest is the US Dollar, followed by the European Euro, the Japanese Yen, the British Pound, the Swiss Franc, the Canadian Dollar, the Australian/New Zealand Dollar, and the South African Rand.
These 8 major currencies are used to buy and sell products all over the world. Here’s the low down on each of them.
The 8 Most Traded Currencies in the World
The Forex Market is the most heavily traded market worldwide. Ten currencies account for 90 % of all Forex trades, and we have discussed those currencies below:
- United States Dollar
The United States Dollars (USD) is the currency that is the most widely traded globally and is also held by commercial and central banks worldwide. The American Dollar is a primary reserve currency and is used for international transactions as well. Many commodities like copper, gold, oil, and precious metals are priced in USD.
- Euro (1 EUR: 1.17 USD)
The Euro is the official currency of the EU (European Union) and is the second most traded currency in the world. The currency is used by 19/27 European Union nations. The Euro is also the second-largest reserve currency globally.
- Japanese Yen (1 JPY: 0.0095 USD)
Japan’s currency is the most widely traded in the market of Asia. Oil is a big factor in determining value of the Yen. Japan is a main importer of oil, so a rise in the prices of oil influences the country’s economy.
- Pound Sterling (1 GBP: 1.29 USD)
The Pound Sterling, also known as the British Pound, is the currency of the UK (United Kingdom). In recent years, the changing relationship of the UK with other European countries has affected the value of the Pound Sterling.
- Australian Dollar (1 AUD: 0.71 USD)
In 2020, the Australian Dollar was the 5th most traded currency in the world. Australia is a main exporter of mined commodities, copper, gold, and also a main oil importer. Therefore, a change in the prices of the commodities and minerals can impact the value of the Australian currency.
- Canadian Dollar (1 CAD: 0.76 USD)
Similar to Australia, Canada also is rich in natural resources and is a main exporter of several commodities. The main trading partner of Canada is its neighbor, the United States, accounts for 75 % of Canada’s exports and 50 % of the imports. As a result, the Canadian Dollar is impacted by changes in the economy of America and the currency.
- Swiss Franc (1 CHF: 1.09 USD)
Switzerland is considered a hub for banking and financial services. The country also has low debt levels and good monetary policies, which has made its currency a ‘Safe Haven.’
- Chinese Renminbi (1 CNY: 0.15 USD)
The Chinese Renminbi also called the Yen, is the 8th most traded currency globally. China mainly exports manufactured goods, and the terms of trade influence the value of the country’s currency. The major trading partners of China are Japan, the United States, and Europe.
The COVID-19 pandemic has negatively impacted most currencies worldwide, and most of those currencies belong to emerging markets. The economies that are heavily dependent on imports of oil and other commodities are struggling right now. Traders and buyers are also unwilling to take risks on weak currencies.
The 10 Forex Currency Pairs
Following is the list of the ten most traded currency pairing in Forex:
- EUR/USD (Euro/United States Dollar)
The US dollar and Euro are representatives of two major economies and are also the most traded currencies worldwide. This currency pair has high liquidity, and the interest rates are set by the Non-farm payroll (NFP), US Federal Reserve, and European Central Bank.
- GBP/USD (Pound Sterling/United States Dollar)
This currency pair consists of the British Pound and United States dollar and is impacted by the performance of the British and American economies. The exchange rate relies on the interest rates that have been set by the Bank of England and the US Federal Reserve. The departure of the UK from the European Union has also impacted the British Pound.
- USD/JPY (United States Dollar/Japanese Yen)
This currency pairing is of the United States dollar and the Japanese Yen and is highly liquid. The US dollar is the most traded currency globally, and Yen is the most traded currency in Japan, so the high liquidity of this pairing is hardly surprising.
The exchange rate of this currency pairing is linked to the US Federal Reserve and the Bank of Japan. The unstable weather conditions in Japan also impact its currency.
- AUD/USD (Australian Dollar/United States Dollar)
The Australian Dollar and the United States dollar make up this currency pairing. This pairing is influenced by the value of Australia’s commodities, such as coal, gold, and iron. The interest rates are set by the US Federal Reserve and Bank of Australia.
- EUR/GBP (Euro/Pound Sterling)
This pairing is of the Euro and the Pound Sterling (British Pound) and is a minor currency. The closeness between Europe and the UK geographically and a strong trade relationship makes it difficult to predict this currency pairing. The departure of the UK from the European Union has made the price of this currency pairing highly volatile. The interest rates of this pairing are decided by the European Central Bank and Bank of England.
- USD/CAD (the United States Dollar/Canadian Dollar)
This major pairing consists of the United States dollar and the Canadian Dollar. Factors that impact this currency pairing are the Canadian economy’s reliance on the prices of oil as the oil is the main exporter of Canada. Rising oil prices decrease the value of the Canadian Dollar.
- USD/CHF (the United States Dollar/Swiss Franc)
This major currency pairing includes the United States dollar and the Swiss Franc. This pairing is generally considered safe, as far as investment is concerned, even during times of an economic crisis. The popularity of this currency pairing is high, so there is a lot of data available.
- NZD/CHF (New Zealand Dollar/Swiss Franc)
This is a minor currency pairing, and it consists of the New Zealand dollar and the Swiss Franc. New Zealand has an increasing agricultural presence worldwide, so this pairing needs to monitor global agricultural prices constantly. The Reserve Bank of New Zealand decides the price of the currency pairing.
- USD/CNY (the United States Dollar/Chinese Yen)
This currency pairing comprises the United States dollar and Chinese Yen, also known as the Chinese Renminbi. However, when the Chinese currency is traded in international markets, it is known as the Yen. The trade war between the US and China impacts this currency pairing, so traders need to watch that.
Traditionally, the Yen value has depreciated against the American Dollar when the Chinese government has tried to decrease the price of their exports.
- USD/HKD (United States Dollar/Hong Kong Dollar)
This is a major currency pairing, and it consists of the United States dollar and the Hong Kong dollar. Due to a linked pairing exchange rate, the HKD moves within the band of 7.75/7.85 (HKD). The ongoing situation in Hong Kong has had an impact on this currency pairing.
The Top Forex Currency Pairs
| # | CURRENCY PAIRING | VOLUME % |
| 1 | EUR/USD | 27.95% |
| 2 | USD/JPY | 13.34% |
| 3 | GBP/USD | 11.27% |
| 4 | AUD/USD | 6.37% |
| 5 | USD/CAD | 5.22% |
| 6 | USD/CHF | 4.63% |
| 7 | NZD/USD | 4.08% |
| 8 | EUR/JPY | 3.93% |
| 9 | GBP/JPY | 3.57% |
| 10 | EUR/GBP | 2.78% |
| 11 | AUD/JPY | 2.73% |
| 12 | EUR/AUD | 1.8% |
| 13 | EUR/CHF | 1.73% |
| 14 | AUD/NZD | 0.96% |
| 15 | NZD/JPY | 0.93% |
| 16 | GBP/AUD | 0.89% |
| 17 | GBP/CAD | 0.81% |
| 18 | EUR/NZD | 0.78% |
| 19 | AUD/CAD | 0.76% |
| 20 | GBP/CHF | 0.73% |
| 21 | AUD/CHF | 0.7% |
| 22 | EUR/CAD | 0.7% |
| 23 | CAD/JPY | 0.67% |
| 24 | GBP/NZD | 0.64% |
| 25 | CAD/CHF | 0.58% |
| 26 | CHF/JPY | 0.57% |
| 27 | NZD/CAD | 0.48% |
| 28 | NZD/CHF | 0.38% |
Conclusion
In this article, we have touched upon key information regarding currencies. We have discussed the eight most important currencies in the world, and we have also mentioned them. In addition, we have also discussed the most popular currency pairings that are traded in the Forex market.
Several factors also impact currencies, such as political turmoil, economic crisis, and natural disasters, so traders need to keep all this in mind before buying or selling a currency. At the end of the article, we have given a table of the most traded currency pairings in the Forex market.
All the information that has been shared in this article is consistent and relevant. However, as always, before making a decision, go through the details mentioned in this article and then decide.