7 Major Currencies of the World That You Should Know About
Trade is one component of international relations that connects virtually every nation on our planet. In order for a country to sustain its wealth, or grow its profits, it must foster agreements in the global market. At the centre of all trade agreements, lies the single most important source in currency.
Currencies can come in various formats. Each type of currency can be unique to its respective nation. Some currencies are more popular than others, and this is reflected in its usage globally.
Here is more information about the seven major currencies of the world:
1. US Dollar Currency
The US Dollar is one of the major currencies of the world. America is often heralded as the most important nation in our world, given the role it plays. This is both reflected in its political influence, in addition to its generally healthy economic outlook. For these reasons, the US dollar is acknowledged as a major currency player in global trade.
As the world’s primary reserve currency, the USD is held by a plethora of commercial banks around the world. International transactions will often use the USD to trade goods and commodities, such as oil. Other valuable materials, like gold, will be priced using this form of currency.
2. Canadian Dollar Currency
Although many nations look to Canada as just America’s northern neighbour, the country is well-developed economically. This is seen through its own type of currency, which comes in the form of the aptly named Canadian dollar. The CAD finds its strengths in major commodities, which are exported daily.
For example, since the country is rich in natural resources like crude oil, the CAD’s value remains high. In addition, since the two are geographically close, America is Canada’s main trading partner. Since this is the case, the strength of the CAD can be tied to the overall health of America’s economy and currency. A lot of currency exchange transactions occur between the Canadian and American dollars.
3. Euro Currency
If the USD is considered globally to be the most accepted form of currency, the EU possesses the runner-up. The euro is the official currency of the European Union, and is used on average by most EU members. It is formally acknowledged as the world’s second largest reserve currency.
An interesting note here is that the euro is a fairly young type of currency, despite its major standing. Historically, it was available for usage in 1999, although the notion of a European-based currency was conceived earlier. The euro is also famous for having one of the highest combined values of circulated notes and coins in the world!
4. Pound Sterling Currency
The United Kingdom, which has formally separated from the European Union, possesses its own currency type. Known as the pound sterling, it is recognized as the official currency for the UK and its territories. Even though its overall value has seen fluctuations in recent years, it’s standing remains high.
Events such as Brexit have impacted the value of the pound in more ways than one. The UK and the EU’s trading relationship is stable, but the pound’s value will inevitably be impacted. Whether or not this will affect its strength in the future remains to be seen. At the moment, however, the pound is here to stay.
5. Australian Dollar Currency
As the world’s fifth-most traded currency, the Australian dollar is an immensely popular type of currency. The country is Oceania’s most populated nation, and is also a major player in terms of exports. This is mainly due to the fact that Australia is rich in natural resources, such as iron and mined commodities.
Currency traders tend to favour the AUD, due to the high interest rates connected to the nation. Moreover, the country has a relatively stable economy and political atmosphere. This allows the AUD to be an attractive currency type for traders. They are always looking to diversify their personal portfolio after all!
6. Japanese Yen Currency
Asia is incredibly diverse, particularly when it comes to the types of currency available. When it boils down to the most important one, however, the Japanese yen takes the top spot.
The yen is often recognized for its strength, which is correlated directly to Japan’s economy. Since it is a major player in manufacturing exports, it is also reflected with positivity in most global markets.
7. Swiss Franc Currency
Switzerland is often regarded as a country that is neutral. This sentiment is accurately reflected in the franc, the country’s localized currency. The franc is considered to be a stable form of currency in foreign exchange markets, since high volatility is rarely a factor. With the help of the Swiss National Bank, its value, and related interest rates, remain in check.
Our world features much more types of currency than most would actually believe. However, trade markets hinge on the success of a few, specific types of currency. As long as their strength and value remains high, traders and investors will see sizeable results!