CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is a key currency?

Understanding key currency

It’s a stable currency, one that doesn’t fluctuate too wildly, which can help set exchange rates and support international transactions. It’s also used to describe the world’s most prominent currencies. The British pound, US dollar, euro and yen are generally regarded as key currencies.

Where have you heard about key currencies?

The term gets attention when deals are agreed between businesses in different countries, they’ll often use a key currency to make the transaction to reduce the risk of exchange rates changing during the deal.

What you need to know about key currencies...

Aside from cross-border deals, key currencies can also be used by nations to improve confidence in their developing economy. For instance, emerging nations might choose to fix their exchange rates to a more established key currency.

On the foreign exchange market, key currency pairs show how many of one currency can be exchanged for another at a given time. The euro and US dollar form a popular key currency pair.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 580.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading