Exchange Rates – Categories of Currencies
Foreign exchange market is an international market that deals with the trading of different currencies. People trade international currencies for different reasons. Some seek foreign currency to travel to a foreign country while others seek foreign currency to facilitate trade with a foreigner. There are also people who trade in foreign currency for the purposes of making a profit through such trading. Exchange rates are usually applied between the different currencies to enable the trading. The exchange rates fluctuate based on a nation's economic strength, balance of payment, bilateral trade among other factors. A currency converter is used to know the equivalence of an amount of one currency for another.
The international currencies that participate in the foreign currency markets are categorized into different groups. These categories are based on the strength of a currency and the dominance a currency has in the international exchange rates market. The different exchange rates groupings are described below.
The international currencies that participate in the foreign currency markets are categorized into different groups. These categories are based on the strength of a currency and the dominance a currency has in the international exchange rates market. The different exchange rates groupings are described below.
Major Currencies
The major currencies are usually seen as the most dominant in the international forex market. These currencies are U.S. dollars, British pounds, Euros, Japanese yen, Australian dollars, New Zealand dollars and Canadian dollars. These currencies are usually used as the base currencies in a currency converter.
Minor Currencies
Minor currencies are the currencies that are not so dominant in the international forex markets but are easily available for trading. They include most currencies for emerging markets and developed nations that are not in the major currencies. Most currency converter platforms will have these currencies available for conversion.
Exotic currencies
Exotic currencies are rarely traded currencies. These currencies will mainly belong to economies that are volatile or that have high inflation and therefore traders are not willing to deal with such currencies. These include currencies such as the Zimbabwe dollar. Most currency converter applications will not include the exotic currencies.
Minor Currencies
Minor currencies are the currencies that are not so dominant in the international forex markets but are easily available for trading. They include most currencies for emerging markets and developed nations that are not in the major currencies. Most currency converter platforms will have these currencies available for conversion.
Exotic currencies
Exotic currencies are rarely traded currencies. These currencies will mainly belong to economies that are volatile or that have high inflation and therefore traders are not willing to deal with such currencies. These include currencies such as the Zimbabwe dollar. Most currency converter applications will not include the exotic currencies.
