Capitalising on the Most Traded Currencies of 2021

There’s no doubt that the demand for forex trading has peaked in South Africa during 2020, against the backdrop of the coronavirus pandemic and increased digitisation throughout the region.

To this end, the daily turnover of fx trading in SA is estimated to be around $19.1 billion per day, with this figure continuing to rise incrementally year-on-year.

Regardless of where traders originate from, a select few of the world’s major currencies remain the most popular among investors. But what are the most traded currencies of 2021 and why are they so popular?

#1. The US Dollar (USD)

Let’s start with the US dollar (USD) or greenback, which is issued by the Federal Reserve in the states and the world’s official reserve currency.

This dominant and benchmark currency is on one side of 88% of all daily forex trades, while the asset accounts for a staggering volume of $2.9 trillion each and every day across all forex broker platforms. To put this into context, global trading volumes total $.6 trillion in the forex market, so the US plays a major role in driving activity and volatility.

In addition to being established as the world’s primary reserve currency, the USD also belongs to the largest and most prosperous economy on the planet. This factor contributes heavily to its popularity, as is the fact that most commodities are priced in USD.

Interestingly, the EUR/USD pairing is also the market’s most traded asset, accounting for more than 24% of total trading activity within the sector.

#2. Euro (EUR)

Next up is the Euro, which is the official currency of the single bloc (European Union) and second most traded asset of its type in the world.

To this end, it accounts for a daily average trading volume of nearly $1.1 trillion, while the asset is issued directly by the European Central Bank (ECB).

Once again, the popularity of the EUR is underpinned by the sheer scale and economic output of the Eurozone region, which now comprises 27 member states (after the departure of the UK following Brexit) boasts some of the most comprehensive and value-laden trade agreements in the world.

Currently, the Euro is also considered to be the second biggest reserve currency in the world, comprising roughly 20% of global reserves in terms of volume.

#3. The Japanese Yen (JPY)

Officially renowned as the currency of Japan, the yen is currently the third most traded globally and one that accounts for a daily average volume of $554 billion.

Currently, the Japanese yen is also the world’s third largest reserve currency, estimated to comprise approximately 4.9% of global currency reserves.

Issued by the Bank of Japan (BoJ), the yen is actually considered to be a relative safe haven in the marketplace. Supported by strong economic fundamentals, the yen has performed relatively well through periods such as the great recession and recent Covid-19 outbreak, creating heightened demand for the asset during times of economic tumult.

So, it should come as no surprise that the JPY remains one of the most traded currencies through 2021, particularly as the economic climate remains uncertain in the wake of the ongoing coronavirus pandemic and the widely publicised Omicron variant.