Four Most Tradable Currencies In Forex
The forex market provides a terrific opportunity for individuals to diversify their portfolios in a business world full of constant fluctuation. Understanding the movement of global currencies can benefit investors tremendously. Here are the top four most tradable currencies that every investor or trader should follow if they plan on joining the forex market.
U.S. Dollar (USD)
The U.S. Dollar, or USD, is the currency used for the United States of America. The USD is a benchmark currency that is used in most transactions around the world. In fact, many other nations use the USD as their primary form of currency, while others use it as an unofficial currency alongside their primary form of currency. The governing entity of the USD is the Federal Reserve Bank, which is widely regarded as the most powerful financial institution in the world. The Federal Reserve Bank is considered an independent committee because its decisions do not need to be ratified by the President or any other government official; however, it is still subject to Congressional oversight. It must still work within the framework of the government’s financial and economic policies.
European Euro (EUR)
The Euro is the official currency of the European Union and the national currency of its member states that elected to adopt it. Those EU nations include Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain. Together, these countries form the Eurozone, a region where the Euro serves as the primary currency across borders. The EUR is governed by the European System of Central Banks, with the European Central Bank providing most of the financial oversight. Critics of the EUR believe that the centralized economic system hurts the countries involved because it does not allow them to implement their own monetary policies.
Japanese Yen (JPY)
The Japanese Yen, or JPY, is the national currency of Japan. It’s had an interesting history and has been pegged to the USD for almost 70 years now. It has been widely known as a floating currency, rising and falling against the USD since 1973. The JPY is governed by the Bank of Japan. Although the Yen experiences quite a bit of fluctuation, Japan represents the world’s second largest economy.
British Pound (GBP)
The British Pound, or GBP, is the official currency of the United Kingdom and its dependencies. It ranks fourth in terms of daily forex trade volume, behind the three afore-mention currencies. In fact, the GBP accounts for about 13% of daily volume on forex markets. Established to borrow money during the war with France in 1694, the Bank of England serves as the central bank for the United Kingdom. It is similar to the Federal Reserve Bank in the United States. Since 1997, the Bank of England has been the primary governing entity for all of the UK’s economic functions.