The global forex market is a vast global entity, and one that comprises approximately 170 different currencies.
However, it’s the world’s eight major currencies which dominate the market, including the omnipotent US dollar (USD) which is on one side of 88% of all forex trades. In total, the seven major currency pairs account for 68% of the market’s daily trading volumes, each of which also includes the greenback.
We’ll explore this further in the article below, while appraising the 10 most traded currencies in the world.
#1 – The US Dollar (USD)
As we’ve already touched on, the USD is the world’s most traded currency, while it’s also established as the primary reserve currency across the globe.
The EUR/USD pairing is also the single most traded asset in the forex market, accounting for more than 24% of all daily trading volumes.
#2 – The Euro (EUR)
The EUR came into being in 1999, as the official currency of the European Union (EU). It’s currently used by 19 of the 27 EU member states, who combine to create a wider economic area called the Eurozone within the single bloc.
The EUR is also established as the world’s second-biggest reserve currency, while it currently trades around the $1.19 mark with the greenback.
#3 – The Japanese Yen (JPY)
The yen is by far the most traded currency in the Asian market, and considered by many investors to be a relative safe-haven in the forex space.
There are several factors that impact the value of the JPY, with the global oil price one of the most telling. As a major importer of the commodity, high oil prices can weigh heavily on Japan’s economy and the underlying value of the yen.
#4 – British Pound Sterling (GBP)
While the official currency of the UK remains a relatively robust forex performer, its value has been significantly affected by the nation’s decision to leave the EU in 2016.
The price of the GBP has seen a particularly pronounced fall against the EUR during the last five years, while it continues to trade in an increasingly narrow range against the USD (the current GBP/USD rate is hovering around the $1.38 mark).
#5 – Australian Dollar (AUD)
The AUD was the fifth most traded global currency in 2020, with this asset supported by a consistently strong economy and a mutually beneficial trading relationship with China.
As a commodity-driven economy that exports significant amount of iron, copper and coal, however, Australia’s dollar regularly sees its price fluctuate in line with the supply and demand of such items.
#6 – The Canadian Dollar (CAD)
Canada is another economy that’s rich in natural resources, while its reliance on exporting commodities means that the CAD is similarly vulnerable to fluctuations in supply and demand.
The CAD is also highly sensitive to changes in the US economy and the strength of the USD, with the trade relations between these two countries accounting for more than 75% of all Canadian exports.
#7 – The Swiss Franc (CHF)
Next up is the CHF, which is the native currency of Switzerland and considered to be another safe haven currency in the forex marketplace.
This is thanks largely to the nation’s sound monetary policies and protected economic status, while the franc also benefits from Switzerland’s globally renowned financial services and banking sector.
#8 – The Chinese Renminbi (CNY)
Also known as the ‘Chinese yuan’, this currency belongs to the fastest-growing economy in the world, and was the eighth most traded globally in 2020.
China also remains one of the largest exporters of manufactured goods in the world, although the Renminbi’s value depends heavily on the country’s precise terms of trade.
#9 – The Swedish Krona (SEK)
Sweden is the first entry on our list that isn’t a major currency, while it’s also not considered to be a major reserve currency in the global economy.
So, although Sweden remains a prominent exporter of goods (including cars and telecom equipment), the value of the Krona tends to fall in line with economic contraction and periods of recession.
#10 – The New Zealand Dollar (NZD)
Last, but not least, we come to the NZD, which relies heavily on the country’s balance of trade with its primary trading partners Australia and China.
Once again, NZ is an export-led economy, and one that mainly sells agricultural produce (such as meat and dairy) into the international marketplace. It’s main imports include automobiles and oil in the modern-day economy.