What is the key currency?

The key currency is a stable currency that does not fluctuate widely, helping to set interest rates and support international transactions. It also refers to the strongest currency in the world. The British pound, the US dollar, the euro and the Japanese yen are usually considered key currencies.

Where have you heard of key currencies?

Businesses in different countries refer to this term when negotiating transactions, and they usually trade in key currencies to reduce the risk of exchange rate movements during the transaction.

What you need to know about the key currencies...

In addition to cross-border transactions, some countries also use key currencies to boost confidence in their economic development. For example, emerging countries may set fixed exchange rates between their currencies and key currencies.

In the foreign exchange market, key currency pairs indicate how much one currency is convertible into another at a given time. The euro and the dollar constitute the key currency pairs in the world today.