Currency is generally accepted as payment, normally issued by an international government and traded within its sovereign jurisdiction. The value of any particular currency varies continuously in relation to many other currencies. The currency market exists as means of profitably exploiting these fluctuations.
The most commonly traded currency in the world is the U.S. dollar followed by the British pound, the Euro, the Japanese yen, Swiss franc and the Australian dollar. The main economic indicators of these currencies are interest rates, trade balances, balance of payments, inflation and balance of capital flows. These are the sources of the foreign currency trade.
The most commonly traded currency pairs in the Forex market are the U.S. dollar with the euro, the British pound with the dollar, Swiss franc with the dollar, Japanese yen with the dollar and the Australian dollar with the euro. Most of the major economies are members of the European Union (EU), including the euro zone, European Central Bank (ECB) and the European Free Trade Association (EFTA). Among these currencies, the euro is the most widely used as currency in worldwide trade. The three mentioned currencies are used interchangeably. Their differences are mainly in terms of economic indicators such as the exchange rate, interest rates, trade balances and balance of capital flows.
As for the currency trading system, it is usually done through a broker or dealer who buys and sells currencies on behalf of their clients. In the traditional system, banks offer this service to their customers through the banks they operate. However, with today’s development in technology, the virtual currency trading system is now available through online banks. For this reason, most FX investors do not require a traditional bank account for trading purposes.
A variety of countries’ legal tender are in use in the world and each country has a set of coins that are legal tender. For example, United States dollars are commonly used in the forex trading business. The other main currencies are the Eurodollar, the Swiss franc and the British pound. In addition to these currencies, there are also others that are not widely used in the commercial transactions. These include the Chinese Renminbi, the Philippine Peso and the Singaporean Ringgong.
In recent years, an increasing number of citizens have become fond of collecting foreign coins and paper notes. One popular place to find old US dollars, British pounds and other currencies is at flea markets, garage sales and swap meets. Another place is at estate sales and estate ware-shops. People also like to purchase rare coins in coin shows and auctions. Many private collectors and investors also have an interest in foreign currency and their collection can be seen on television, in magazines and on the internet.