The Top 8 Most Tradable Currencies

By Richard Lee Updated March 19, 2022 Reviewed By Somer Anderson  Fact Checked By Jiwon Ma

Although the foreign exchange market is often billed as a banker's game, currencies can sometimes be a great way to diversify a portfolio that might have hit a bit of a rut. It's a market that can also offer tremendous opportunities when other global forums enter the doldrums.

As a result, knowing a little bit about forex, and the fundamentals behind it, can make significant additions to any trader, investor, or portfolio manager's arsenal. Let's take a look at eight currencies every trader or investor should know, along with the central banks of their respective nations.

KEY TAKEAWAYS

The U.S. dollar is the home denomination of the world's largest economy, sometimes referred to as the greenback.

The European Central Bank holds the right to issue euro banknotes as it sees fit, while policymakers can interject at times of bank or system failures.

The Bank of Japan governs monetary policy as well as currency issuance, money market operations, and data/economic analysis.

The Bank of England has a Court of Directors or governing body appointed by the Crown. It also has a Monetary Policy Committee headed by the governor of the bank.

The Swiss franc, the Canadian dollar, the Australian and New Zealand dollars, and the South African rand round out the list of top tradable currencies.

1. U.S. Dollar (USD)

Central Bank: Federal Reserve (Fed)

Current Interest Rate: https://www.federalreserve.gov/releases/h15/

The Almighty Dollar

Created in 1913 by the Federal Reserve Act, the Federal Reserve System—also called the Fed—is the central banking body of the U.S.1 The system is itself headed by a chair and board of governors, with most of the focus being placed on the branch known as the Federal Open Market Committee (FOMC). The FOMC supervises open market operations as well as the monetary policy or interest rates.2

The current committee is comprised of five of the 12 current Federal Reserve Bank presidents and seven members of the Federal Reserve Board, with the Federal Reserve Bank of New York president always serving on the committee. Even though there are 12 voting members, non-members—including additional Fed Bank presidents—are invited to share their views on the current economic situation when the committee meets every six weeks.2

Sometimes referred to as the greenback, the U.S. dollar (USD) is the home denomination of the world's largest economy, the United States.3 As with any currency, the dollar is supported by economic fundamentals, including gross domestic product (GDP), and manufacturing and employment reports.4

However, the U.S. dollar is also widely influenced by the central bank and any announcements about interest rate policy.5 The U.S. dollar is a benchmark that trades against other major currencies, especially the euro, Japanese yen, and British pound.

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