Taking a close look at a country’s currency can teach us a few things about this country, about its economic strength, and about the people who call it home.
Some currencies are only used in their country of origin, while others can be accepted in more than one location. Some are extremely popular around the world, while others are almost unknown to foreigners.
Below are the ten most used currency in the world:
Currency #1: United States Dollar (USD)
The United States Dollar, or USD, is the most used currency in the world and most traded currency as well. It is considered to be the top global reserve currency, which means it is held by central and commercial banks around the world, for investments as well as for daily transactions.
The USD is issued by the Federal Reserve of the United States, and the very first banknote was printed in 1862, due to a coin shortage.
Currency #2: Canadian Dollar (CAD)
The Canadian Dollar has been issued by the Bank of Canada since 1867. Just like the AUD, the CAD is a commodity currency, and its value is influenced by the demand for the natural resources exported by the country.
Most of the commodities exported by Canada are being purchased by the United States, and for this reason, the value of the Canadian Dollar is also influenced by the state of the economy in the USA. Like its American counterpart, the Canadian Dollar is commonly found in currency exchange transactions due to its wide usage.
Currency #3: Euro (EUR)
The Euro, which is printed by the European Central Bank, is the official currency of 19 out of 27 members of the European Union. It was first introduced in 1999, but the first coins and banknotes were launched in 2002.
The Euro is the second most used and traded currency in the world. It allows for more simple cross borders transactions between the countries that use it, but it does have some drawbacks, such as a rigid monetary policy.
Currency #4: Japanese Yen (JPY)
The Japanese Yen is the official currency of Japan, and it has been produced and distributed by the Bank of Japan since 1871.
Just like the USD and the EUR, the JPY is a global reserve currency. It is also seen as a safe haven currency, meaning that whenever the financial market is volatile, many investors consider the Japanese Yen a safer investment than other currencies.
Currency #5: Pound Sterling (GBP)
The Pound Sterling is the official currency of the United Kingdom and of many of its territories. It is another major global reserve currency, and the fourth most used and traded one in the world.
The GBP is issued by the Bank of England, and is known as the oldest independent currency. However, no one knows exactly how the value of this currency might change in the future, due to the Brexit referendum in 2016.
Currency #6: Australian Dollar (AUD)
The Australian Dollar has been issued by the Reserve Bank of Australia since 1966, and it is the official currency of the Commonwealth of Australia. It’s also the fifth most used and traded currency around the globe.
The AUD is known as a commodity currency. Australia exports many commodities, including oil, coal, copper, and iron, and as a result, the price and the demand of those commodities influence the currency’s value.
Currency #7: Swiss Franc (CHF)
The Swiss Franc is another currency that gets traded daily around the world. It has been issued by the Swiss National Bank since 1850, and it is the official currency of Switzerland and Liechtenstein. The CH in its currency code stands for Confoederatio Helvetica, which is in Latin.
The Swiss Franc is another safe haven currency which represents a safe investment opportunity during times of economic uncertainty.
Currency #8: Chinese Renminbi (CNY)
The Chinese Renminbi is the official currency of China, and another highly used and traded currency. It has been issued by the People’s Bank of China since 1948. While Renminbi is the formal name of the currency, one unit of the Renminbi is called a Yuan.
China exports many manufactured goods, and the value of the Renminbi depends on the country’s terms of trade with other countries, mostly in Europe and in North America.
Currency #9: Hong Kong Dollar (HKD)
The Hong Kong Dollar is the official currency of Hong Kong, and it is also being used in Macau. This highly traded currency has been issued by the Hong Kong Monetary Authority since 1935.
Unlike the previous currencies on this list, the Hong Kong Dollar is not a major reserve currency.
Currency #10: New Zealand Dollar (NZD)
The New Zealand Dollar has been issued by the Reserve Bank of New Zealand since 1967. It’s not a major reserve currency, but it is still the tenth most traded one in the world.
The value of the NZD depends, among other things, of the quality of the country’s trading relationships.