how a national currency works
a national currency such as the u s dollar the euro and the japanese yen jpy is recognized as the world s most widely accepted type of currency each has a global status as a reliable reserve currency with minimal risk of collapsing as a result most foreign transactions are conducted in one of the three currencies some countries have also adopted other nations currencies as their own examples of countries that make use of another country s currency are parts of latin america regions like ecuador and el salvador which recognize and accept the u s dollar for the exchange of goods and services 12some countries like the united arab emirates peg or fix their currency rates to the u s dollar trading national currenciescurrency is not only used to buy goods and services it is also a store of value and can be traded and exchanged as a financial instrument similar to stocks bonds cryptocurrency and any other asset classes the currency market or forex fx is the largest marketplace in the world and continues to expand each year and currency trading has a longer window of time than stock trading it takes place 24 hours a day five days a week but more often than not a national currency will only actively trade during its country s regular market hours the u s dollar may record a large volume or wild fluctuations between 9 30 a m and 4 00 p m when the market opens and closes if we compare fx trading to crypto trading its window of time is less because crypto trades 24 hours a day seven days a week recent moves by a few companies have extended stock trading time in march 2022 robinhood added 4 hours to stock trading for its clients currency trading is often performed in pairs meaning you trade one currency with another that said greater adoption and creation of exchange traded funds etf have made it possible to trade individual currencies 