An Introduction to Currencies

Currencies

An Introduction to Currencies

Currencies are the units of money that are commonly used in international trade, including the purchase of goods, services, and investment. A country’s currency acts as its unit of account, since it is usually chosen to symbolize the worth of a certain piece of property or financial services. In a simple sense, a currency in this sense is currency in any shape or form when in circulation or use as a medium of trade, particularly circulating foreign coins and banknotes.

Currencies traded on major exchanges usually carry a tag that says what country they originated from, such as USD for the United States dollar, GBP for British pound, etc. There are other international currencies, however, such as those that are traded on European Union (EU) currency. These are known as ‘cross currency,’ since they are usually issued by a variety of countries. These are traded like stocks on major stock exchanges.

The value of a particular currency usually rises and drops depending on the state of the economy of a country, interest rates, the current trends in various industries, etc. A trader will usually base his investments around the currency that he thinks will rise in value in the future. Trading is done electronically through computers and brokers, and over the counter through brokers who maintain the trade in the currency exchange market. Since this type of trading involves high-level investing, it is usually done through banks or financial institutions that are highly regulated by the government. Forex trading is also done electronically through electronic day trading platforms, which allow traders to enter and exit the market at designated times.