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G10 Currencies

Published by Jonathon Jachura

Reviewed by Bowen Khong, ACCA

Are you looking for information on G10 currencies?

If you’re a Forex trader, understanding which countries’ currencies are part of the G10 currencies is essential. This guide covers all the details of the G10 currencies, their size, and how commodities affect them. 

What are the G10 Currencies? 

G10 currencies are the ten most popular traded currencies in the world. These ten currencies are the world’s most liquid currencies since they have the highest frequency of being bought, sold, or exchanged. 

Economists can connect the G10 currencies to the price movements of commodities. For example, the Canadian dollar directly correlates with oil, as Canada is a net oil exporter. On the other hand, Japan is a net importer of oil, so it benefits from declining oil prices. 

The most popular forex pairs in G10 currencies include AUD/USD, GBP/EUR, EUR/USD, GBP/USD, USD/CHF, USD/CAD, and USD/JPY.

There are several other groups, including G7, G5, and G3. 

SDR

SDR, which stands for Special Drawing Rights, is an international reserve asset. It was created in 1969 by the IMF (International Monetary Fund) as a supplement to the member countries’ reserves. 660.7 billion SDR has been allocated and addresses the needs of each member country. 

The IMF bases the SDR’s value on five currencies: the U.S. dollar, the Chinese renminbi, the euro, the Japanese yen, and the British pound sterling. They review this basket of currencies every five years to accurately reflect the currencies in trading and financial systems. 

The SDR itself is not a G10 currency, but all the currencies it comprises of are G10 currencies. 

U.S. Dollar (USD)

The U.S. dollar is considered the world’s most crucial reserve currency. It is used in 87 percent of all foreign exchange, meaning a vast majority of foreign exchange are currencies being traded from or to USD.

It is a benchmark currency for the global market: as the dollar’s value rises, as does the cost of commodities in dollars but lower in foreign currencies. 

This essentially means the commodities are cheaper when the dollar value is low but expensive when the dollar value is high. 

Sixteen countries use the U.S. dollar as their official currency. The IMF reported that the total broad money in the USA at the end of 2020 totaled $23,302.05 trillion. 

Australian Dollar (AUD)

The Australian dollar is traded substantially due to constituents connected to geography, geology, and government policy. Australia is one of the wealthiest countries in the world when it comes to natural resources. They have an abundance of coal, metals, diamonds, wool, and meat. 

The Australian dollar is the official currency in six countries. According to the IMF, the total broad money at the end of 2020 totaled $2,271.26 billion, which only consists of data from Australia itself. 

Canadian Dollar (CAD)

Canada’s currency, the Canadian dollar, ranks tenth in the world. The strength of the Canadian dollar is backed by its products, such as minerals, petroleum, grains, and wood products, as well as relatively consistent growth. 

The Canadian Dollar is used solely in Canada.

British Pound (GBP)

The British pound is backed by Britain’s exports, such as machinery, precious metals, minerals, cars, and pharmaceuticals, among others. The lower inflation rate also lends well to the exchange rate of the British pound. 

The British pound is still currently used in Great Britain, the South Sandwich Islands, the British Antarctic Territory, British Overseas Territories, and Tristan de Cunha. 

Euro (EUR)

Euros are used commonly in trading because of several benefits. These include things such as price stability and influence on the global economy. 

Nineteen countries, all within the European Union, use euros as the official currency.

New Zealand Dollar (NZD)

The New Zealand Dollar is commonly traded internationally for several reasons, including the country’s stable economy, heavy foreign trade, and a substantial foreign bank base. 

Four countries use it as an official currency. The IMF reported total broad money amounting to 365.78 billion in 2020. 

Japanese Yen (JPY)

Japanese yen is widely popular in international trading due to the incredibly low-interest rates that support the yen’s value. 

Japanese yen is the official currency in Japan only. At the end of 2020, the IMF reported total broad money amounting to JPY 1,516,800.00 trillion. 

Norwegian Krone (NOK)

The Norwegian Krone is the 14th most-traded currency in the world. It corresponds heavily with other currencies and varies in accordance with adjusting interest rates and oil prices in the global market. 

The Norwegian Krone is the official currency used in Norway, Svalbard, and on Bouvet Island. The IMF reported the total broad money totaled NOK 2,634.88 billion at the end of 2020. 

Swiss Franc (CHF)

This form of currency is very strong due to the financial markets’ stability, transparency, and regulation.

The Swiss Franc is the official currency in two countries. 

Swedish Krona (SEK)

The Swedish Krona is seen as a safe-haven currency, which is expected to hold steady value even during times of market turmoil. 

Sweden is the only nation that uses the Swedish Krona as currency. The IMF report for the total broad money from the end of 2020 totaled 4,419.96 billion. 

What is the G10?

The Group of Ten or G10 is not the same as G10 currencies. The 11 nations in G10 share economic interests. The G10 nations consist of Canada, Belgium, Germany, France, Japan, Italy, the Netherlands, Switzerland, Sweden, the United Kingdom, and the United States. Switzerland plays a relatively minor role in G10.

This group came together when the ten wealthiest member countries of the International Monetary Fund, or the IMF, agreed to participate in the General Agreements to Borrow, or GAB.

G10 members meet at least annually but will gather more often if needed to discuss financial matters that impact the nations involved. The group was formed in 1962 by original G10 members. 

Switzerland began participating in 1964, thus strengthening the group. Even though Switzerland joined as a participant of G10 as the eleventh participating nation, the name remained unchanged. 

What are the G7 Currencies? 

The G7 currencies consist of the currencies used in the United States, Germany, France, Japan, Italy, Canada, and the United Kingdom. These were the original G7 countries, but several of them have undergone changes to their monetary policy and the use of national currency. 

The euro has since replaced french, Italian, and German currencies. The currencies used by G7 nations include the U.S. dollar, euro, pound sterling, the Canadian dollar, and Japanese yen.  

What are the G5 Currencies? 

Five leading countries, the United States, Japan, Germany, the United Kingdom, and France, make up the G5 currencies. These five are the world’s leading industrial forces. 

The leaders of these countries meet intermittently to deliberate economic cooperation. Each of these nations also has central banks that meet to review monetary matters. 

What are the G3 Currencies? 

The G3 currencies are composed of three currencies: the US dollar, the euro, and the Japanese yen. Most consider this trio the most important currencies globally, as they are the most traded and liquid currencies on the foreign exchange market. 

These three currencies are a formidable combination due to a few shared factors. Sustainable growth, a sturdy banking and financial system, and long-standing political stability all lend to the combined strength of G3. 

Jonathon Jachura
Jonathon Jachura
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