In the turbulent, constantly changing world of forex economics, nothing is ever truly a given. Hard currencies, the term most often given to an expectedly stable currency, can turn soft in a matter of days due to political unrest, while the opposite is true for weaker currencies that can suddenly rise within a few months. Truth be told though, hard or soft, there is no definitive rule or formula to guarantee stability within the market – the best you can do is follow trends and develop a keen eye.
The US dollar has been considered a hard currency for the longest time, with most of the world’s monetary systems being tied to it at some point, though trends over the last few years have seen various countries diversifying their practices and moving away from it. The global financial crisis of the 2000’s saw a few changes and events that led to mass erosion in dollar confidence, though for the time being, it’s still stronger and more stable than a lot of other currencies. It’s one of the currencies most used in international transactions and several countries besides the Unites States use it as their official money.
Second largest when it comes to trading next to the dollar, the euro currently has the highest value of combined banknotes and coins in global circulation – far more than the dollar even. The name is said to have been coined by a Belgian teacher who wrote a letter to the President of the European Commission in 1995 suggesting it. At midnight in January 1999, when it was introduced to the global market, all the currencies of other countries involved in the launch ceased to exist independently, though there are still certain countries that can exchange notes until 2022.
Hard currency Japanese Yen is the third most traded in the world. The name translates into ‘round object’ in Japanese and refers to the original trading system where silver coins were used. It lost most of its value during World War 2 and faced other economic obstacles over the years, dropping in value in the 80’s and 90’s, then reaching an amazing high in the late 90’s, most notably 1995, when Japan’s economy rose to new heights, almost matching that of the US.
The British pound is the fourth most traded currency in the forex market. There are other currencies also called pound, so when trading it is called by its official name, pound sterling. Historically, pennies were made from fine, pure silver, though in 1158, King Henry II introduced a new coinage which was made from what we know today as sterling silver, which is harder-wearing. Throughout the reigns of different royals, the coins and value of coins fluctuated a lot, though in 1694 the Bank of England was established and began to issue paper money. Interestingly, the United Kingdom was invited to adopt the euro as its new currency, but government felt it wasn’t in their national interest to do so. When it comes to value, the pound gives the euro a good run.