This article is taken from the Forex Journal (December 2008 issue).
The author, David Waring, is the founder and community host of www. InformedTrades.com; online communities devoted to helping traders of all experience levels find the quickest path to profitability.
- David Waring looks at reasons why the U.S. is and will continue to be the ‘King of the Currency World.’ His research provides many insights into the statistics that lay behind the fact that the U.S. dollar is included in most Forex trades.
Although there has been lots of news lately about the U.S. dollar losing some of its status, as of this writing there is no doubt that the dollar is still the King of the Currency World. There are several primary reasons for this that we will cover and which are behind the fact that no matter what currency a trader trades, pretty much everyone in the Forex market follows the U.S. dollar.
The first reason the dollar is the king of the currency world is the fact that it is a part of each of the world’s most actively traded currency pairs. According to the Bank of International Settlements and as listed here, these currency pairs account for 67% of the daily turnover in the Forex market. When you add the U.S. dollar/Swedish krona currency pair and all of the currencies categorized as “other” traded against the U.S. dollar, the total rises to 89%