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Currency Classification of Foreign Exchange Market

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Shivangi Mujumdar Follow


Apr, 17 2021

Apr, 17 2021

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In exchange trading, investors can choose the foremost suitable type to trade consistent with the Currency's various characteristics so that they will get twice the result with half the trouble. There are mainly five sorts of currencies within the exchange market. 


1.Commodity Currency 


Commodity currencies are mainly the resources and export tendencies of the countries to which these currencies belong. The Australian dollar and Canadian dollar are typical commodity currencies. The most characteristics of commodity currency are high interest rates. Exports occupy a comparatively high gross national product and the major producers and exporters of some important primary products. Its rate of exchange changes within the same direction as a particular commodity gold price. 


2. Speculative Currency 


Both the pound and, therefore, the yen belong to the speculative Currency. The pound is that the world's Currency. It's currently the foremost valuable Currency. Due to its high rate of exchange against the US dollar, the daily fluctuations also are large. Especially, its trading volume is way worse than the euro, so its characteristics are cashed out as Strong volatility. 


3. European Currency 


The currencies issued by countries that are geographically located in Europe belong to the e cu currency. The euro's load within the US dollar index is 57.6%, which is that the largest proportion. Therefore, the euro can be considered the opponent of the US dollar. Investors can ask the euro to gauge the strength of the US dollar. Due to its large proportion and therefore the large volume of transactions, the euro currencies are the foremost stable in non-US currencies. 


4. Asian sub-Currency 


The Japanese yen especially represents Asian sub-currency. When facing the danger of worldwide economic imbalance, the RMB's appreciation pressure is usually raised to the approval of the yen. 


5.US Currency 


It has a close relationship with the US economy. The difference between the US dollar group and the commodity currency is especially whether these countries are closely associated with the US economy, which is reflected within the exchange rate. The Canadian dollar trend against the main currencies is according to the trend of the US dollar against major currencies, so during a strict sense, The Canadian dollar may be a particularly typical dollar group currency. 


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Shivangi Mujumdar

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