The 7 Emerging Currencies to watch out for
If there is an accurate way to describe the foreign exchange market the word to be used would be turbulent. The heavily traded currencies have remained so for a long time now but the turbulent market ensures that no single currency dominates. This same turbulent market has seen the rise of second-tier currencies that are threatening the reign of the 7 most traded currencies. These 7 currencies are from the world’s emerging markets.
“Some of the seven on this list may seem obvious but others will downright surprise you.” [Tweet this]
Let’s see what these seven currencies are and how they impact the market. It is however important to mention the top traded currencies for comparative purposes. The US dollar and the Euro are in position one and two, no surprises there.
The Japanese Yen and the British Pound occupy the next two positions. In the next three positions you will find The Australian dollar, Swiss Franc and the Canadian Dollar. These rankings are courtesy of the 2013 BIS survey.
The Currencies Challenging the Status Quo
We have already seen the world’s major currencies and it is not surprising why they are the most traded. It is also not quite a surprise why they occupy the first seven spots. Their traded volume as well as their hierarchy is being threatened by 7 emerging markets currencies.
The first four currencies in the second-tier are not that surprising to most traders. As you would expect that are the Brazilian Real, the Russian Ruble, Indian Rupee and the Chinese Yuan. The Mexican Peso, The Turkish Lira and the South African Rand complete this band of currencies.
The major reason why every trader, you included should pay attention to these 7 currencies is very simple. It has a lot to do with the increased trading turnover they have commanded in a three year period. To be more specific, collectively these 7 currencies have experienced an increase in traded volume to 10.8% in 2013 from 6.2%. All of these currencies belong to the Emerging market economies.
The 3 biggest movers of the 7
Of the 7, the Mexican Peso, the Chinese Yuan and the Russian Ruble have recorded the highest surges in trading turnover. The Mexican Peso in particular grew 171% in traded volume making it the 8th most actively traded currency. It is also not surprising that an increase in traded volume for these emerging market currencies is resulting in a reduced turnover for the major currencies.
This is not to say that these emerging currencies do not have their own economic challenges to surpass. Just as with any economy they have a bagful. It is just an indication that the forex market as we know it may be experiencing some changes. As to what these changes may mean in the future, we are going to have to wait for the future to get here.
Have you ever traded any of these currencies? Share your experience with us in the comments section below.
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