With transactions totaling over $4 trillion every day, the foreign exchange market (FOREX) is the world’s largest publicly traded market. The majority of transactions are done by businesses including corporations, mutual funds, pension funds, hedge funds, banks and insurance companies.
However, every year, individual Americans buy hundreds of millions of dollars’ worth of foreign currencies, mainly for overseas travel and purchases.
Over the past year, the U.S. dollar has strengthened substantially against most major currencies. This makes foreign travel cheaper and more attractive, while stretching the value of money overseas.
This also makes trading in FOREX much more attractive for Americans as well because the U.S. dollar can buy more of the currencies issued by countries with weaker economies then the U.S.
There are several reasons for the strengthening of the dollar, however, the main ones include relatively strong growth in the United States compared with the rest of the world, combined with efforts by foreign governments to weaken their currencies in order to boost exports.
Here are five of the currencies Americans are purchasing and trading the most in:
Over the past 12 months the peso has weakened by more than 22% against the dollar, reaching a high of 17.3 pesos per dollar on August 24. The currency is the eight-most actively traded in the world.
This is driven by Mexico’s status as a major non-OPEC oil producer and its close proximity to the United States. leading to American’s making an estimated 21 million trips to Mexico in 2015.
Over the past year, the Canadian dollar has weakened by almost 15% over the past year. This is due in large part to the weakness in the price of oil, a key Canadian export. Traders now get more than 1.3 Canadian dollars to one U.S. dollar, compared with 1.12 a year ago and 0.95 in July 2011.
The top travel destinations for Americans are France, Italy, Germany and Spain and they are among the 19 members of the European Union that uses the euro as their official currency. Over the past year, the Euro has weakened by 16%, as the economic strength in Germany has been offset by the continuing problems in a number of the southern European countries, especially Greece.
The British Pound has only declined by around 3% against the dollar over the past year, reflecting a relatively strong economy and stable interest rates. Roughly 2.5 million Americans visit Great Britain, including Scotland, Wales and Northern Ireland every year.
The Japanese Yen has also only declined by about 3% over the past year against the dollar, however, it’s down nearly 43% over the past five years. This reduction in cost to Americans has been a major boost to Japan’s tourism economy. Another reason tourism has been booming in Japan is the reduction in fear over the effects of the 2011 radiation leak in Fukushima following the earthquake and tsunami.
Thank you for taking the time to visit my blog. If you enjoyed this article, let me help you with any of your professional content needs including original blog articles, website content and all forms of content marketing. Please contact me at firstname.lastname@example.org and I will put my 10+ years of experience to work for you.