If you thought that the U.S. dollar and Euro are the only major currencies in the world, you are in for a big surprise.
When we talk about major currencies, we often restrict ourselves to the United States dollar and Euro. There is absolutely no doubt about the fact that these two are used widely all over the world today. That, however, doesn’t mean they are the only widely used currencies in the world. The right place to look out for widely used currencies would be the foreign exchange market. Abbreviated as forex or FX, it is an international over-the-counter financial institution which deals in currency trading.
An Overview of the World’s Major Currencies
The term currency exchange or foreign exchange involves buying and selling of various currencies. Pairs of these currencies are created in order to facilitate trading. A currency pair is a simple quotation, which compares the currency of one country with that of another. While the currency which is used as reference is known as the ‘quote currency’, that which is used in relation is known as the ‘base currency’. Given below is a list of the major currencies, which are traded extensively all over the world, as of today, along with the country of origin, currency code, and comparison with the U.S. dollar.
|Currency||Currency Code*||Country||In USD**|
|United States dollar||USD ($)||USA||1|
|Euro||EUR (€)||European Union||0.75|
|Japanese yen||JPY (¥)||Japan||83.87|
|Pound sterling||GBP (£)||United Kingdom||0.63|
|Australian dollar||AUD ($)||Australia||1.02|
|Swiss franc||CHF (Fr)||Switzerland||0.98|
|Canadian dollar||CAD ($)||Canada||1.01|
|Hong Kong dollar||HKD ($)||Hong Kong||7.76|
|Swedish kronor||SEK (kr)||Sweden||6.91|
|New Zealand dollar||NZD ($)||New Zealand||1.33|
*The currency code, technically referred to as the ISO 4217 code, is basically a 3 letter ISO certification code assigned by the International Organization for Standardization (ISO) in order to define currencies in circulation the world over today. While the country code is used to denote the first two letters of this code, the third letter is the initial of the currency itself. In case of the U.S. dollar, for instance, the three letter code is USD, wherein the first two letters, U and S depict the country code for the United States, while D stands for the dollar.
**While referring to the comparison of a particular currency with the U.S. dollar, you need to take into consideration the fact that the value of these currencies keeps fluctuating.
Some of the major currency pairs in market today are EUR/USD (Euro – U.S. dollar), USD/JPY (U.S. dollar – Japanese yen), USD/CAD (U.S. dollar – Canadian dollar), AUD/USD (Australian dollar – U.S. dollar), etc. In economics, the term ‘trade-weighted index’ refers to the economic tool which is used to compare the exchange rate of a particular currency against its trading partners (countries). The U.S. Dollar Index (USDX) is one of the best examples of the same, and is often used when comparing these currencies.
Post Script: A closer look at the list above and you will notice that all the countries featuring in this list are economic superpowers, which hold the key to the world economy.