For everyone who takes part in the trading industry, keeping pace with the latest trends of the currency market is of vital importance. There are lots of currencies in the world, and if you want to make a profit you should be aware of their current rates and whether it’s worth trading with a given currency at a certain moment. Usually, the most popular currencies that everybody has heard of are the US dollar, the British pound, and the euro but other than this, many other currencies deserve traders’ attention.

The currency market is the largest and most liquid market throughout the world which is open 24/7. Exchange rates change daily, the values of currencies constantly fluctuate, and at different times different currencies can be more beneficial for traders worldwide. This is why the traders need to understand the differences between the currency pairs and realize the factors which can have an impact on the forex market before they choose the currency pairs to trade. 

There are many ways to choose the best currency pair to trade in a given situation. Because the strongest currency can be measured in different ways, it’s important to find a safe place where you can store your capital. The easiest way of doing so is to search online and find recent information about trading tendencies. For example, the information about the strongest currency pairs can be found on Axiory broker review pages or any other broker-related content, and most of them mention CAD/USD or EUR/USD as the best-performing currencies in 2020. But these currencies are usually in the list of the most popular but not the strongest currencies in the world. As the situation frequently changes, USD or EUR doesn’t always have the highest monetary values among all currencies. 

Best currencies of 2020

Every month Eurostat provides us with updated statistics about the world’s leading currencies. For this, it’s important to analyze the exchange rates and interest rates and pay attention to the currency fluctuations while making comparisons across them. For now, we can see that the strongest and highest currency in the world is the Kuwaiti Dinar (KWD) which has strongly held its spot for many years. The reason for this is Kuwait’s flourished economy which is almost completely dependent on producing oil. The country is a major oil supplier, claiming almost 104 million barrels, which makes the economy relatively stable. 

KWD was first introduced in the mid-1960s and from this time, it keeps growing in value, steadily maintaining its position as the most expensive currency of the world. In particular, nowadays 1 KWD is equal to about 3.26 USD. Kuwait’s Diner is followed by the Bahraini Dine, which is mainly used for oil trading operations, and Omani Rial which is the official currency of Oman. Other currencies in the list of 2020’s strongest currencies are Jordanian Dinar, Gibraltar Pound, Pound sterling, Cayman Islands dollar, Euro, US dollar, and Swiss franc. 

So, contrary to the common sense myth that the USD has the highest monetary value in the world’s currencies it’s not the most valuable currency in the world. However, nobody can deny that it’s a strong currency and a very popular one, which has the highest demand and therefore, is the most widely used currency in the world. USD is used in almost every country of the world but it’s legal tender only in certain countries, specifically, in the USA, Ecuador, El Salvador, the Marshall Islands, East Timor, Zimbabwe, Micronesia, and Palau.

Factors affecting the values of currencies 

To determine which currency performed the best in 2020, it’s important to estimate the contribution of several factors. First of all, the strength of a currency is determined by the rate of international market demands. For example, according to Bloomberg, the KWD is high in demand in 2020 because there is a huge demand for oil nowadays and lots of countries need it to purchase oil. Doing so means that the exchange rate of the KWD will rise. But there are many more things that need to be taken into consideration.

Keep in mind that while trading, you need to watch out for the factors that affect both currencies in pairs and not only just one of them. For example, if we take the above-mentioned EUR/USD pair we should analyze the economic indicators and political situation of Europe, as well as the US to evaluate the whole picture. In 2020 things like Brexit of the EU, the upcoming presidential elections of the US, and the coronavirus pandemic are major events that affected the values of these currency pairs. Realizing all this is important to define your trading position and perform effectively.

Other than this many other factors take an important part in determining currency values and have an essential effect on the forex market in general. Among them are interest rates which is one of the things that investors pay attention to earn higher profits. The level of inflation is a key determinant as well for the movement of the currency. Besides, economic news and releases, general political situations, and international trades also play major roles in determining the best-performing currencies. 

The best currency to invest in nowadays

Finally, to say which currency is the best to invest in 2020, we need to point out once again that the forex market is still under the influence of Brexit, the pandemic, the performance of the global economy, improvements in international trade and political events such as tensions between the USA and Iran and presidential elections in November. Based on all these things, investors may prefer more stable currencies such as the Japanese Yen or Swiss franc. Analysts predict that in the next year the demands for the USD will be lower because of the decrease in investments in the global market. However, it still has the potential to rise during elections. In contrast, GBP finished this year relatively stronger compared to the USD or EUR.

Despite the ambiguity of today’s financial markets, investors still suppose that the most reliable currencies today to invest in are the EUR/USD, GBP/USD, EUR/GBP, AUD/USD, or USD/CAD. But if the current tendencies go on and the economic conditions will improve in the economies like Brazil, Mexico, Vietnam, or Korea, the overall situation will probably change.