What Currencies Are Traded in Forex?

The foreign exchange market, also known as Forex or FX, is one of the largest and most liquid financial markets in the world. In this market, traders exchange various currencies, making it essential to understand what currencies are traded in forex to navigate the market effectively. The market operates 24 hours a day, five days a week, and offers traders opportunities to profit from currency price fluctuations.

In this article, we will explore what currencies are traded in forex, highlighting the major, minor, and exotic currency pairs. Understanding these different categories will provide a comprehensive view of the market and allow traders to make more informed decisions when participating in forex trading.

Major Currencies in Forex

When asking, "what currencies are traded in forex?" it is important to first consider the major currencies. These are the most frequently traded currencies globally and often serve as the base for many forex pairs. Major currencies typically come from economically stable countries with large trading volumes.

US Dollar (USD)
The US Dollar is undoubtedly the most dominant currency in forex. It is involved in most currency pairs and often acts as the base or counter currency in trades. The USD is also the world's primary reserve currency, meaning it is widely held by central banks as part of their foreign exchange reserves.
Euro (EUR)
The Euro is the second most traded currency in forex. It is used by the Eurozone, which includes 19 of the 27 European Union countries. The EUR/USD pair is the most traded currency pair globally, making the Euro essential for forex traders to understand.
Japanese Yen (JPY)
The Japanese Yen is another major currency, widely traded in the forex market. Japan's robust economy and its significant role in global exports make the JPY an essential currency in the market.
British Pound (GBP)
The British Pound is one of the oldest currencies still in circulation and plays a crucial role in forex trading. The GBP/USD pair, also known as "Cable," is one of the most liquid currency pairs in the world.
Swiss Franc (CHF)
The Swiss Franc is often considered a safe-haven currency due to Switzerland's economic stability and neutrality in global conflicts. It is commonly traded against the US Dollar and Euro.
Canadian Dollar (CAD)
The Canadian Dollar is another significant currency in the forex market. Often linked to the price of oil, as Canada is a major oil exporter, the CAD is traded in pairs with the USD and other currencies.
Australian Dollar (AUD)
The Australian Dollar represents the Australian economy, which is heavily influenced by commodities and trade relations with Asia. The AUD is traded in various pairs, especially with the USD and JPY.
New Zealand Dollar (NZD)
The New Zealand Dollar is also part of the major currencies in forex, although it is less liquid than the others. Still, it plays an essential role in the market, especially in the Asia-Pacific region.

These major currencies are the foundation of the forex market, with most trading activity involving at least one of these currencies. When asking what currencies are traded in forex, these eight major currencies will be the answer in the vast majority of cases.

Minor Currencies in Forex

Beyond the major currencies, there are also minor currencies traded in forex. These currencies are not as widely traded as the majors, but they still have substantial liquidity and are commonly paired with major currencies. Some of the minor currencies include:

Swedish Krona (SEK)
The Swedish Krona is the currency of Sweden. While it is not as commonly traded as the USD or EUR, it still holds significance in forex trading, particularly in the Scandinavian region.
Norwegian Krone (NOK)
The Norwegian Krone is another Scandinavian currency traded in forex. Like the SEK, it is frequently paired with major currencies, particularly the Euro and US Dollar.
Danish Krone (DKK)
The Danish Krone is the official currency of Denmark. Although it is less liquid than the Swedish Krona or Norwegian Krone, it is still a notable minor currency in forex.
Singapore Dollar (SGD)
The Singapore Dollar is another important currency, especially in Southeast Asia. The city-state of Singapore has a well-developed economy, and its currency is actively traded in forex markets.
Hong Kong Dollar (HKD)
As a major global financial hub, Hong Kong’s currency, the Hong Kong Dollar, is widely traded in forex. It is often paired with the US Dollar and is influenced by the region's economic performance.

While these minor currencies are not as widely traded as the majors, they are still an integral part of the global forex market. When asking, "what currencies are traded in forex?" it’s essential to consider these as part of the broader picture of currency trading.

Exotic Currencies in Forex

Exotic currencies are typically from smaller or emerging market economies. These currencies tend to have lower liquidity and more volatility, making them riskier for traders. However, they also offer the potential for high rewards due to their price movements. Exotic currencies are often paired with major currencies, creating what are known as exotic currency pairs. Some examples of exotic currencies include:

Brazilian Real (BRL)
The Brazilian Real is the currency of Brazil, one of the largest emerging markets in Latin America. While it is not as liquid as the US Dollar or Euro, it is still actively traded against major currencies like the USD and EUR.
Indian Rupee (INR)
The Indian Rupee is the currency of India, an emerging economy with a large population and a growing middle class. Although it has lower liquidity than major currencies, it is still traded in the forex market.
South African Rand (ZAR)
The South African Rand is the official currency of South Africa. It is one of the more commonly traded exotic currencies due to the country's significant role in the African economy.
Turkish Lira (TRY)
The Turkish Lira is another exotic currency that attracts forex traders due to Turkey's geopolitical importance and large economy. The TRY is often paired with the Euro and US Dollar.
Mexican Peso (MXN)
The Mexican Peso is the currency of Mexico, and it is often considered an exotic currency due to its volatility. However, it is one of the more liquid exotic currencies, especially when paired with the US Dollar.
Thai Baht (THB)
The Thai Baht is the currency of Thailand, a growing economy in Southeast Asia. Although it is considered an exotic currency, it is frequently traded in the forex market, especially against the USD and EUR.

Exotic currencies can be highly volatile, making them appealing for traders seeking larger price swings. However, they also present significant risks, and understanding what currencies are traded in forex includes recognizing the complexities of trading these exotic pairs.

Conclusion

In conclusion, understanding what currencies are traded in forex is essential for any trader who wishes to succeed in the market. The major currencies, including the US Dollar, Euro, Japanese Yen, and British Pound, dominate most forex trades. However, minor currencies and exotic currencies also play a vital role in the market, offering unique trading opportunities.

Whether you're trading major pairs like EUR/USD, exploring minor pairs like SEK/USD, or diving into the volatility of exotic currencies like the Brazilian Real, each currency offers a distinct set of opportunities and risks. By familiarizing yourself with the different types of currencies traded in forex, you can make more informed trading decisions and develop strategies that align with your trading goals.

Understanding the answer to "what currencies are traded in forex?" and how they function in different market conditions will give you a comprehensive foundation in the world of forex trading.