Currency is any form of money officially issued by a governing body or central bank to be used as legal tender. Dating back to 9000 B.C., currency has assumed many unique forms ranging from basic raw materials to futuristic polymer banknotes. No matter the geographical region or chronological era, currency plays an integral role in trade and international commerce.
It has been said that a good indication of a country's economic health is the value of its money. Presidential and parliamentary elections often influence the value of both domestic and foreign currencies. Issues such as a nation's trade balance, industrial production and inflationary concerns often play key roles in the election of a political candidate to public office. The result of a hotly contested election can lead to a sudden rise or fall in the perceived value of a nation's money.
In addition, volatilities facing global commodity pricing can cause dramatic international exchange rate fluctuations. The market value of crude oil, natural gas and precious metals often prove to be correlated with currency pricing. Definitive moves within these markets can have a widespread impact upon the foreign exchange market as a whole.
The over-the-counter foreign currency market, known simply as forex, provides a platform for traders and investors to attempt to capitalize upon exchange rate volatilities. The forex market is the largest global marketplace, boasting an average daily turnover eclipsing US$5 trillion. An abundance of trading options, liquidity and limited barriers to entry entice many traders and investors to make forex their preferred financial market.
Throughout the COVID-19 pandemic of 2020, emerging market (EM) currencies faced a collection of unprecedented challenges. As a result, many EM currencies experienced a swift devaluation due to falling commodity…
Established as the official currency of Japan by the Meiji government in 1871, the yen (ISO code: JPY ¥) is the third-most used currency in the world. With a long…
The South African rand (ZAR) is a free-floating currency, local to Africa's second-largest economy. Operating without a commodity or currency peg, the rand's value is relative to evolving levels of…
According to the Bank of International Settlements' (BIS), the foreign exchange market accounts for US$6.6 trillion in aggregate daily turnover. Monies of all types contribute to this enormous figure, making…
Despite having the second-largest economy in Africa and a wealth of natural resources, South Africa's currency, the rand (ZAR), has been in a nearly 30-year downtrend with some notable peaks…
Backed by the robust nature of the U.S. economy, the U.S. dollar is the global reserve currency. The U.S. dollar (USD), or "greenback," is the most widely accepted currency in…
The surprise outcome of the 2016 United Kingdom Brexit Referendum sent valuations of the British pound sterling (GBP) into chaos. Upon the final vote tally coming in at 51.9% for…
The Brexit transition process impacts the British pound sterling (GBP) through bolstering periodic volatility. Uncertainty surrounding the enactment of Article 50, Divorce Bill and negotiations over the crafting of a…
The Special Drawing Right (SDR) is an international reserve asset. Created by the IMF in 1969, SDRs are used to facilitate transactions and supplement IMF member country reserves. An SDR…
The U.S. government shutdown of 2018-19 was the longest in history, illustrating a growing division in American politics. The product of a budgetary impasse, issues such as immigration reform and…
Learn more about what constitutes a currency war, which occurs when multiple countries devalue or depreciate their currencies at the same time.
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