The foreign exchange market, also known as the forex market, is a global decentralized market where currencies are traded. It is the largest financial market in the world, with an average daily turnover of over $5 trillion. The forex market is open 24 hours a day, five days a week, and is accessible from anywhere in the world.
In the forex market, currencies are always traded in pairs. For example, the EUR/USD pair represents the euro and the US dollar. The first currency in the pair is called the base currency, while the second currency is called the quote currency. In forex trading, the value of one currency is always determined in relation to the other currency in the pair.
There are many currencies that are traded in the forex market, but some are more popular and widely traded than others. The major currencies in the forex market are:
1. US dollar (USD)
The US dollar is the most widely traded currency in the forex market. It is the world’s reserve currency, meaning that it is held in significant quantities by central banks and other financial institutions around the world. The US dollar is also the primary currency used in international trade and is the currency of choice for many businesses and individuals around the world.
2. Euro (EUR)
The euro is the second most widely traded currency in the forex market. It is the currency of the European Union and is used by 19 of the 27 EU member states. The euro is also used by many other countries outside of the EU as their official currency, such as Montenegro and Kosovo.
3. Japanese yen (JPY)
The Japanese yen is the third most widely traded currency in the forex market. It is the currency of Japan and is often used as a safe-haven currency in times of economic uncertainty. The Japanese yen is also popular among carry traders, who borrow yen at low interest rates and then invest in higher-yielding currencies.
4. British pound (GBP)
The British pound is the fourth most widely traded currency in the forex market. It is the currency of the United Kingdom and is also used in some of its overseas territories. The British pound is often affected by political and economic events in the UK, such as Brexit and changes in interest rates.
5. Swiss franc (CHF)
The Swiss franc is the fifth most widely traded currency in the forex market. It is the currency of Switzerland and is often used as a safe-haven currency in times of economic uncertainty. The Swiss franc is also popular among carry traders, who borrow francs at low interest rates and then invest in higher-yielding currencies.
6. Canadian dollar (CAD)
The Canadian dollar is the sixth most widely traded currency in the forex market. It is the currency of Canada and is often affected by changes in commodity prices, particularly oil. The Canadian dollar is also closely tied to the US economy, as Canada is the largest trading partner of the US.
7. Australian dollar (AUD)
The Australian dollar is the seventh most widely traded currency in the forex market. It is the currency of Australia and is often affected by changes in commodity prices, particularly iron ore and coal. The Australian dollar is also closely tied to the Chinese economy, as China is Australia’s largest trading partner.
8. New Zealand dollar (NZD)
The New Zealand dollar is the eighth most widely traded currency in the forex market. It is the currency of New Zealand and is often affected by changes in commodity prices, particularly dairy. The New Zealand dollar is also closely tied to the Australian economy, as Australia is New Zealand’s largest trading partner.
In conclusion, the forex market is a global decentralized market where currencies are traded. The major currencies in the forex market are the US dollar, euro, Japanese yen, British pound, Swiss franc, Canadian dollar, Australian dollar, and New Zealand dollar. These currencies are widely traded and are affected by a variety of factors, including political and economic events, commodity prices, and interest rates. As a forex trader, it is important to understand the major currencies in the market and how they are affected by different factors.
