An Introduction to Currencies

A currency in the simplest possible sense is currency in circulation, especially circulated as a medium of commerce, and especially when in regular use or circulation. The units of currency vary in different countries and are usually indicated by the country name and/or emblem of that country. Some countries issue their own coins for circulation.


Currencies may also be traded on major exchanges such as the New York Board of Trade (NYBOT) or the London Board of Trade (LBOT). Major exchanges usually issue multiple currencies to be traded and are usually traded in pairs. For instance, the pound is usually exchanged against the US dollar. The major currency pairs are the GBP/USD, USD/JPY, GBP/CHF, CHF/USD, USD/EUD, CHF/EUR and GBP/CHF. Many large financial institutions, international corporations, commercial banks and other organizations often trade in forex, and most of these trades are done through the London market. It is worth noting that there are sometimes instances when the major currency trading markets are combined, as for example when some currencies are traded on the LBOT.

There are different ways of determining the value of a foreign currency, depending on its country of origin. For example, the spot foreign exchange rates are determined by the selling price of one particular currency against that of another at any given moment in time. These rates are usually updated daily, and for more information on when they will be updated, you can check the central clearing house website. Another way of looking at the value of a currency is to determine its strength or weakness based on how it has performed versus its domestic currency over time. Many investors and traders use the strength of a major currency as a fundamental or technical indicator of that country’s economic performance or potential growth.