On a frequent basis, people deal with foreign currencies on either a direct or indirect basis. You’ll almost certainly have to swap your domestic currency for a foreign one anywhere you go on vacation. And if you buy pasta in your local supermarket that was imported from Sweden, somebody had to pay the Swedish producer in Swedish Krona in order for the item to be imported.
This shows that you are part of the cycle where you have acted in some form in the foreign exchange market. This is why currencies are so extremely interesting. People use them on a regular basis for a variety of reasons, while traders and investors try to benefit from exchange rate volatility.
A currency is much more complex than the typical user realises. During periods of economic uncertainty, some currencies can appreciate in value, while others closely track the price of specific commodities.
The forex trading market is undoubtedly the biggest market in the world and it is a market which is never in sleep mode.
With this article, we have compiled a list of the 10 most traded currencies in the world in 2021. Let us get started:
1. US Dollar (USD):
The US Dollar stands firm as #1 in the list of most traded currencies in the world in 2021. With a daily trading volume of $2.9 trillion, it accounts for 88.3 percent of all global forex trades. It is the most dominant currency in the world, issued by the US Federal Reserve. The United States has the world’s largest economy and one of the most robust, allowing the USD to become the world’s reserve currency.
2. Euro (EUR):
The Euro, which was adopted in 1999, is the official currency of 19 of the European Union’s 27 member states. The European Central Bank, which is based in Frankfurt, Germany, distributes it. The euro is behind the 32 percent of all global forex trades. Europe’s enormous economic power makes it the second most exchanged currency in the world. The Euro’s share of global forex trades is expected to rise even more in the years ahead.
3. Japanese Yen (JPY):
Japan is a major exporter of consumer goods around the world. The Japanese Yen is the country’s official currency and the world’s third most exchanged currency. With a daily average volume of about $550 million, Japanese Yen is just behind Euro. It is also the world’s third-largest reserve currency, accounting for roughly 4.9 percent of global currency reserves.
Because of Japan’s hyper interest rates which are on the lower side, low debt, and large trade surplus, the Yen is considered a currency on the safe spectrum. The international hold trade is driven by the Japanese Yen.
Buyers lend Japanese Yen at reduced interest levels and invest in higher-yielding currencies on the other side of the world. They are locking in a higher interest profit on their savings than they are paying on the loan by doing so.
4. Pound Sterling (GBP):
Once upon a time, the British Pound was the world’s second most traded currency. But it has now slipped down to fourth. The growth of the Yen and Euro, as well as the decline of the Colonial Power, have driven it down to fourth place. It also accounts for 12.8 percent of global forex trades, with an estimated daily trading volume of $422 billion. The pound sterling is a common reserve currency as well.
The Pound, which is issued by the Bank of England, is a well-known currency that plays an important role in London’s global forex trading center.
The United Kingdom is also the world’s largest forex trading centre, with the London trading session responsible for more than 40% of daily volume. The Pound Sterling is the oldest distinct currency still in use today.
5. Australian Dollar (AUD):
The Australian Dollar is Australia’s official currency. The Reserve Bank of Australia issues it, and it’s even used by a variety of Australian territories who don’t have their own monetary and fiscal policy.
The Australian Dollar is primarily recognised as a commodity-based currency. Since Australia is a big exporter of commodities like coal and iron ore, this is the case. As a result, commodity prices and global demand have a major impact on the Australian dollar’s value.
The Australian dollar is the 5th most traded currency in the world, accounting for 6.8% of global forex trading volume. Australia, like Canada, is a major exporter of raw materials. As a result, commodity trading volumes and prices have an effect on the Australian dollar’s resilience.
6. Canadian Dollar (CAD):
Canada is a major commodity producer and exporter. Canada’s main trade partner is the United States. The United States accounts for nearly half of Canada’s overall imports and 75 percent of its exports.
With an estimated daily trading volume of about $166 billion, the Canadian dollar is the world’s sixth most traded currency.
Canada’s currency is just behind US Dollar, Euro, Yen and Pound Sterling in the reserve currencies list.
7. Swiss Franc (CHF):
Switzerland’s official currency is the Swiss franc. The Swiss National Bank issues this currency, which has an estimated daily trading volume of about $165 billion. The Swiss franc makes up 5% of all global forex trades. Nearly half of Switzerland’s international exchange is with other EU nations.
Switzerland’s economy is one of the world’s most stable, with a highly educated labour force and financial and political stability.
8. Chinese Yuan (CNY):
The Chinese Yuan is the official currency of China. It is also known as Chinese Renminbi. It is distributed by the People’s bank of China. The exchange rate is controlled by China’s main bank. It was pegged against the US Dollar but now it’s pegged against a basket of currencies.
9. Swedish Krona (SEK):
It is Sweden’s official currency and comes at the #9 spot in the list of most traded currencies in the world in 2021. The Swedish Krona has a daily average volume of about 56 million US Dollars. Despite becoming a member of the EU, Sweden has refused to accept the euro because a majority of the voting public reject the move.
Sweden chooses to use the krona due to a major workaround and has no intention of opting for Euro which is currently the 2nd most traded currency in the world. It is usually pegged against the Euro.
10. New Zealand Dollar (NZD):
New Zealand’s official currency has managed to retain its place in the most traded currencies in the world. It has been doing so for some time. It is involved in around 2% of the daily forex trades.
Neither is the Swedish Krona a reserve currency nor is the New Zealand Dollar considered one. Australia and China do the most trade business with New Zealand which keeps their currency relevant.