Major Currencies In Foreign Exchange

Foreign exchange market is one of the biggest currency trading markets in the world with
number of different currencies being traded daily through it. However, the major forex trading
centers are situated in London, Tokyo, Frankfurt, New York, Zurich, and Paris. And the major
currencies in foreign exchange are discussed below. It will be beneficial for you to have a good
knowledge of leading currencies of forex market while learning about foreign exchange money
trading. Let us take a look at the important currencies in foreign exchange trading.
The U.S. Dollar: The United States dollar is undoubtedly the main currency of foreign exchange
markets. Generally all the other currencies are quoted in terms of US dollars. It is the major
foreign exchange currencies since long. Due to the International Economic and Political Unrest,
the US dollar is not only the main currency of foreign exchange markets but the safe-haven
currency as well. This was strongly established during year 1997-1998 when there were
economic crises in Southeast Asia. The US dollar established itself as major currencies in foreign
exchange toward the end of the Second World War. Moreover the Bretton Woods Accord further
supported US dollar as the undisputed king of leading currencies of forex when the other
currencies were virtually pegged against it. However, the importance of US dollar was reduced
marginally when a new currency called Euro was introduced in the year 1999. Nowadays, the
major foreign exchange currencies which are being traded against the US dollar are the Euro,
Japanese yen, British pound Swiss franc.
The Euro: The euro was introduced to become the important currencies in foreign exchange
trading just like the American dollar. No doubt, euro is also among the major foreign exchange
currencies traded in the forex. It has a strong international presence right from the European
Union countries to other parts of the world. However, the main issue with euro is that it is
affected by unequal growth, high unemployment, and government resistance to structural
changes.
The Japanese Yen: The Japanese yen is also among the major currencies in foreign exchange. It
is ranked as the third most traded currency in forex world. No doubt, its international presence is
quite smaller as compared to other two leading currencies of forex the US dollar and the euro.
The Japanese yen is considered to be highly liquid around the world, practically around the
clock. The majority of forex trading in yen is done by Japanese economic and financial
conglomerates. There is a strong relationship between the yen and Japanese stock market, the
Nikkei and the real estate market in Japan. When the Bank of Japan tried to deflate the double
bubble that occurred in the Japanese stock and real estate markets, it had a negative effect on the
Japanese yen, although the impact was short-lived.
The British Pound: Another main currency of foreign exchange markets, the British pound. It
was considered the currency of reference until the end of the Second World War. The pound is

among important currencies in foreign exchange trading even today and is most traded currency
in forex against the euro and the US dollar. However, it has a very small presence against other
major currencies in foreign exchange. The two-year bout with the Exchange Rate Mechanism,
between 1990 and 1992, had a soothing effect on the British pound, as it generally had to follow
the deutsche marks fluctuations, but the crisis conditions that precipitated the pound's
withdrawal from the ERM had a psychological effect on the currency. Ever since the introduction
of euro, the bank of England is taking measures to bring the high U.K. rates closer to the lower
rates in the euro zone. There are chances that the British pound could join the euro, one of the
leading currencies of forex euro in the coming future, provided that the U.K. referendum is
positive.
The Swiss Franc: One of the important currencies in foreign exchange trading, the Swiss franc.
Despite the fact that the economy of Switzerland is relatively small, its currency franc is the
fourth most traded currency in forex trading. This is the only European currency which is neither
related to the European Monetary Union nor to the G-7 countries. The fact that Swiss franc is
among the major currencies in foreign exchange, closely shows the how strong is Swiss
economy and finance despite all odds. The one reason behind Swiss franc being among the most
traded currency in forex, is its close economic relationship with Germany and hence with the
euro zone. Therefore, in terms of political uncertainty in the East, the Swiss franc is favored
generally over the euro. The Swiss franc is considered to be the most stable currency of the
world.