This is a general guide to the most traded currencies and currency pairs in the world 2020. Take a closer look to make your predictions in 2020.
One of the biggest markets in the world is the Foreign Exchange Market (forex market), and it accounts for approximately €6 trillion worth of daily trades. This market rose due to the need for a system that would enable different nations can exchange their currencies for purposes of Trading.
An understanding of the most traded currencies 2019 and most traded currencies 2018 will help individuals who are looking to get into the forex trading industry or those already in the industry but are looking for the best currencies to trade in 2020.
This guide intends to give you deeper insights into some of the best trading forex currencies in the world to:
- Efficiently trade tax: You will be able to understand how best to make profits from a spread bet because you will not be required to make payments on taxes.
At the same time, you will understand how profits from the Contract of difference (CFD) can get offset against any losses incurred for tax purposes.
- Use leverage to magnify your exposure: You can easily open a trading position by paying a small deposit, referred to as a margin.
- Speculate on the movements of prices in both directions: You will know when to go long or when to go short without the need to take ownership of the primary currencies.
For beginners in forex trading, it is essential to open a demo account to familiarise yourself with the trading environment while practising in a risk-free environment. This gives you a better chance to understand the fundamentals of trade currency sets and how best to do your analysis.
Below is the forex currency list of the ten most traded currencies in the world.
1. US Dollar USD
The US dollar is the United States’ official currency issued by the Federal Reserve. It ranks as the number one most traded currency in the whole world with a daily trading average volume of approximately US $2.9 trillion. It is ultimately the most valuable currency in the world.
The USA being the largest economy and international trade’s powerhouse is one of the primary factors why the Dollar is quite popular. It gets also categorized as the global primary reserve currency primarily for investments and international transactions. In estimates, the currency constitutes about 63% of currency reserves in terms of volume.
In as much as the Dollar is significantly influenced by the demand for commodities and the country’s economic performance, such factors as the fluctuations in the performance of other states using the Dollar economically.
2. Euro EUR
It is the European Union’s official currency issued by the European Central Bank (ECB) and accounts for approximately €1 trillion in daily average trading volume.
The primary factor that makes the euro the second most traded currency in the world is the economic clout of the region the currency is used, popularly known as Eurozone. It comes second as the reserve currency globally just below the US dollar, accounting for just about 20% of the reserve by volume.
Some of the influencing factors to the currency’s strength are but not limited to the economic and politic developments within the Eurozone. However, some other underlying factors that can affect the performance of the euro are the GDP releases, EU-wide and national wide elections, economic calendar and ECB meeting announcements among other things.
3. Japanese yen JPY
This is Japan’s official currency, and it ranks third as the most traded currency in the world. The yen accounts for about US$554 billion in terms of the daily average trading volume.
At the same time, it also ranks third as the world’s that largest reserve currency with roughly 4.9% of the world’s currency reserves. The Japanese yen is issued and distributed by the Bank of Japan (BoJ).
This currency’s strength dramatically depends on the power of the economy of Japan, especially the booming manufacturing sector. The country’s manufacturing sector is globally known for its critical exports, including machine tools, motor vehicles, textiles, ships, and electronics.
That is the reason why several forex players pay their attention to any economic releases because the value of the yen goes up with any apparent demand increase of these products. Such information can be obtained from GDP data, unemployment numbers, BoJ meeting announcements, among others.
Since China’s currency, the renminbi, is a crucial competitor to Japan in terms of manufactured products, the strength of the yen will depend on just how stable the renminbi is comparatively.
What does this mean?
When the Chinese renminbi is weak, the country exports competitively more to the international markets, which in turn reduces the demand for Japanese products. Consequently, the value of the yen will depreciate to that effect.
However, it is also important to note that the value of oil can also play an instrumental role in determining the value of the yen. This is because Japan is a major importer of oil. When the prices are high up, the economy will take a huge blow.
4. The pound sterling GBP
The pound sterling is the United Kingdom’s official currency, including its territories. It constitutes the fourth most traded currency in the world. It has roughly US$422 billion in daily average trading volume. It constitutes about 4.5% of the global reserve currency, which also places it in the fourth position.
The strength of the pound sterling primarily depends on the performance of the UK’s economy with other underlying factors such as Bank of England’s monetary policies, inflation rate data and employment reports.
However, in the past few years, the strength of the pound sterling has been influenced by the apparent changes in the relationship between the UK and Europe. This is mostly attributed to UK voting to leave the EU. This leaves the future value of the currency hanging in the balance because the future trading relationships are seemingly uncertain.
5. Australian Dollar AUD
The Australian Dollar marks the Commonwealth of Australia’s official currency. In the list of the big currency of the world, it falls in the fifth position with an average trading volume by day being roughly US$223 billion.
The Australian Dollar is issued by the Reserve Bank of Australia (RBA). Since it constitutes approximately 1.8% of the global reserve value, it falls in the sixth position in regards to the global reserve currency.
The Australian Dollar is strongly valued because of the terms of trade and commodity prices.
Australia being a major exporter of commodity goods like copper, iron, coal and other commodities including oil, any shifts in terms of prices and trading volumes of such commodities can significantly impact the strength of the Australian Dollar.
The value of the AUD is also influenced by Australian foreign liabilities. Any increase in these liabilities will most likely cause a subsequent decrease in the value of the AUD when compared to other trading currencies.
A noteworthy point is that the differences between other central banks those of RBA could affect the strength of the AUD because funds will most likely easily flow to such nations with higher interest rates and flow away from those with lower interest rates.
6. Canadian Dollar CAD
This is Canada’s official currency issued by the Bank of Canada (BoC). It comes at the sixth place in the currency ranking 2019. It accounts for approximately US$166 billion in daily average trading volume, lying at position five in the list of commonly held reserve currency with a reserve value of 2.02% of global reserves.
The country is rich in natural resources and as such, it is a major commodity exporter. This means that the prices of their exports are a major determining factor of the value of the Canadian Dollar. If the price of the commodities, then the value of the CAD will likely rise too and the opposite is also true.
The USA accounts for a majority of Canada’s export constituting about 75%, making it Canada’s prime trading partner. It also accounts for up to 50% of imports. For this reason, the value of the CAD is highly determined by how the USA’s economy is performing, and that is tied to the value of the USD.
Another aspect that influences the value of the CAD is the difference in interest rates that these two states offer. This means that if the BoC’s rates become higher than the Fed’s, the value of the CAD will rise and vice versa.
7. Swiss Franc CHF
This is Switzerland’s official currency that is issued by the Swiss National Bank (SNB). It is the seventh most traded currency in the world and it accounts for a daily average trading volume of approximately US$164 billion. It also accounts for about 0.18% of the global reserves by value, making it the eighth commonly held reserve currency.
Over the years, the country has earned a good reputation in terms of banking secrecy and financial services, low debt levels and apt monetary policies. These are all the factors that make the Swiss franc a safe-haven currency.
The implication of this is that when there is global economic uncertainty, more money flows into the country giving it the strength it deserves.
However, approximately half of the country’s exports are consumed within the Eurozone, meaning that how the nations in the Eurozone perform and the value of the euro has a great bearing on the value of the Swiss franc.
8. Chinese Renmimbi CNH
The Chinese renminbi is also colloquially referred to as the ‘yuan’. It is the People’s Republic of China’s official currency and it is issued by the People’s Bank of China (PBoC). It falls at number eight in the list of most currencies traded globally.
With an average daily trading volume of about US$142 billion and 1.23% of global reserves, it is the seventh most commonly held reserve currency. This is despite the fact that the renminbi is an emerging market currency.
For quite some time, the Chinese renminbi was associated with the USD. This changed when the PBoC’s monetary policy was loosened. The move allowed the renminbi to float within a narrow band alongside the major currencies of the world. The move was aimed at letting the currency float freely.
It is in many economists’ view that the Chinese currency has been the greatest beneficiary from a weak renminbi. This made Chinese exports perform more competitively over the last several years.
Furthermore, the country has also been able to have a constant trade surplus with other states. Therefore, it is the reason why they have doubts about whether they target the renminbi to float freely.
China is a major exporter of manufactured goods and commodities, renminbi’s value largely depends on China’s terms of trade, especially with Europe and the USA. That is why the Trump trade wars could have significant effects on the value of the renminbi in the coming years.
9. Hong Kong Dollar HKD
This Hong Kong’s official currency and it is issued by the Hong Kong Monetary Authority (HKMA). It is the 9th most traded currency in the world. The currency accounts for roughly US$117 billion in daily average trading volume.
It is important to note that the Hong Kong dollar is not a major reserve currency, unlike its top traded counterparts.
The HKMA issues HKD 10 notes and all the other currency denominations are issued by Bank of China, Standard Chartered Bank and The Hong Kong and Shanghai Banking Corporation (HSBC).
The HKD turnover doubled between April 2016 and April 2019. This increase shot the value of the HKD up making it rise the ranks from the 13 positions globally.
This was mostly attributed to the uncertainty around Hong Kong’s political situation. The effect was increased volatility of HKD trading sets, which created more opportunities for making profits.
10. New Zealand dollar NZD
This is New Zealand’s official currency that is issued by the Reserve Bank of New Zealand. It ranks as the 10th most traded currency in the world with approximately US$65 billion in daily average trading volume. It is also not a major global reserve currency.
The value of the currency primarily depends on the country’s trading relationships, how strong the currencies of its trading partners are, and the value of its imports and exports among others. The major trading partners are Australia and China and its major exports are meat and agricultural products.
Some of the most traded currencies set you should know
This is a list of the most traded currency sets to look out for in 2020.
- USD/EUR: This is the most traded currency pair. This is probably because, among the modern Forex brokers, the pair has the lowest spread. It is also not a very volatile pair, meaning that if you are don’t want to take huge risks while Trading, this is possibly the best pair to pick for that.You can place your bet with little doubt in your mind. There is also a lot of information everywhere that is easily accessible on how best to trade with this pair. Beginners will likely benefit from this because any rookie mistakes they make will not have great repercussions.
- USD/GBP: The popularity of this pair can be majorly attributed to the possible large jumps and profitable pips. However, if you have to make higher profits with this pair, you have to take greater risks. Greater risks give greater returns thus classified under the category of volatile currencies.Even though it is highly volatile, there is a lot of market analysis available to help traders while trading.
- USD/JPY: This is yet another popular trading pair that can be regularly seen in forex trading. Traders can easily follow through the trades because they can easily follow a smooth trend unlike other currency sets, attributed to low spreads.If well-calculated, it has the potential of delivering to you very profitable and exciting opportunities in the world of forex trading. According to experts, the pair may not show increased activity in 2020 thus can easily be used as a backup tool when carrying out carry trade.
- USD/CHF: This is ultimately the leader of flat and carries trade. You cannot undertake any flat trades if you have not considered this pair. Shifts rarely occur and if does, it does not last beyond two weeks or so. Most changes the pair experiences are attributed to the dynamics of the USD.It can be very profitable when trading on oscillators, stochastics or breaks. In 2020, there is no great shift that can be expected.
- USD/CAD: This pair displays a smooth pattern because of the close relationship between the two countries. It is important to consider the time zone factor because high volatility and active trades are observed during the American trading session.The pair was steady all through 2019 and it is expected to remain through the first half of 2020. The second half of 2020 may display surprising moves and strong volatility because of the presidential election.
- EUR/GBP: This pair moves in a very strange manner. It shows some sharp rises and falls, support and resistance levels and flat movement.You can rarely see other types of movements with this pair but traders can open rebound and breakout orders with about the same potential of implementation. In 2020, this pair will likely be driven by any piece of news on Brexit.
Top 20 most traded currencies in the world
This is a list of the top 20 highest currencies in the world in no particular order as at the end of 2019.
- Turkish Lira
- Fijian Dollar
- Singapore Dollar
- Brazilian Real
- Israel New Shekel
- Libyan Dinar
- Brunei Dollar
- Cayman Islands Dollar
- Gibraltar Pound
- Kuwait Dinar
- Bahraini Dinar
- Omani Rial
- Jordanian Dinar
- Pound Sterling
- Australian Dollar
- United States Dollar
- Swiss Franc
- New Zealand Dollar
- Canadian Dollar
Here is the list of the lowest currency in the world
Here is a list of ten of the lowest currencies in the world.
- Iranian Rial (-114,000 IRR/USD)
- Venezuelan Sovereign Bolívar (44,498.65 VES/USD)
- Vietnamese Dong (23,187.71 VND/USD)
- Indonesian Rupiah (13,995.73 IDR/USD)
- Sierra Leonean Leone (9,711.13 SLL/USD)
- Uzbek Sum (9,536.16 UZS/USD)
- Guinean Franc (9,515.39 GNF/USD)
- Lao or Laotian Kip (8,849.12 LAK/USD)
- Paraguayan Guarani (6,428.58 PYG/USD)
- Cambodian Riel (4,042.79 KHR/USD)
Some of the popular currency symbols are:
- Euro (EUR) €
- Pound sterling (GBP) £
- US Dollar (USD) $
- Japanese yen (JPY) ¥
Most Traded Currencies – Final Words
Identifying the best currency pair to trade is not a simple task. The best way to do it is through practical experience. Therefore, it is more advisable to open a demo account first and start trading while continuing to practising in Trading.
Once you’re ready, open your EverFX trading account, using a real account and start Trading, we are here for you!