kinds-of-major-currencies-and.html

The U.S. Dollar. The United States dollar is the world's main currency – an universal measureto evaluate any other currency traded on Forex. All currencies are generally quoted in U.S. dollar terms.Under conditions of international economic and political unrest, the U.S. dollar is the main safe-havencurrency, which was proven particularly well during the Southeast Asian crisis of 1997-1998? As it was indicated, the U.S. dollar became the leading currency toward the end of the SecondWorld War along the Breton Woods Accord, as the other currencies were virtually pegged against it. Theintroduction of the euro in 1999 reduced the dollar's importance only marginally.The other major currencies traded against the U.S. dollar are the euro, Japanese yen, Britishpound, and Swiss franc.The Euro. The euro was designed to become the premier currency in trading by simply beingquoted in American terms. Like the U.S. dollar, the euro has a strong international presencestemming from members of the European Monetary Union. The currency remains plagued by unequalgrowth, high unemployment, and government resistance to structural changes. The pair was also weighedin 1999 and 2000 by outflows from foreign investors, particularly Japanese, who were forced to liquidatetheir losing investments in euro-denominated assets. Moreover, European money managers rebalancedtheir portfolios and reduced their euro exposure as their needs for hedging currency risk in Europedeclined.The Japanese Yen. The Japanese yen is the third most traded currency in the world; it has amuch smaller international presence than the U.S. dollar or the euro. The yen is very liquid around theworld, practically around the clock. The natural demand to trade the yen concentrated mostly among theJapanese keiretsu, the economic and financial conglomerates. The yen is much more sensitive to thefortunes of the Nikkei index, the Japanese stock market, and the real estate market. The British Pound. Until the end of World War II, the pound was the currency of reference.The currency is heavily traded against the euro and the U.S. dollar, but has a spotty presence against othercurrencies. Prior to the introduction of the euro, both the pound benefited from any doubts about thecurrency convergence. After the introduction of the euro, Bank of England is attempting to bring the highU.K. rates closer to the lower rates in the euro zone. The pound could join the euro in the early 2000s,provided that the U.K. referendum is positive.The Swiss Franc. The Swiss franc is the only currency of a major European country thatbelongs neither to the European Monetary Union nor to the G-7 countries. Although the Swiss economyis relatively small, the Swiss franc is one of the four major currencies, closely resembling the strengthand quality of the Swiss economy and finance. Switzerland has a very close economic relationship withGermany, and thus to the euro zone. Therefore, in terms of political uncertainty in the East, the Swissfranc is favored generally over the euro.Typically, it is believed that the Swiss franc is a stable currency. Actually, from a foreignexchange point of view, the Swiss franc closely resembles the patterns of the euro, but lacks its liquidity.As the demand for it exceeds supply, the Swiss franc can be more volatile than the euro.