The Best Foreign Currencies

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Investing in foreign currency can be a bit riskier than investing in stocks, bonds and mutual funds. The market is open 24 hours a day and, by some estimates, the average daily dollar amount traded in foreign currency markets is more than $3 trillion. That's more than all of the world's stock and bond markets combined.

The U.S. Dollar

The U.S. dollar is the world's most traded currency. It is backed by the credit of the U.S. government and is known as the "world's reserve currency" because the United States is the largest economy in the world.

The Euro

The euro is the common currency of the 15-nation European Union. It is the second most traded currency in the world and is used in countries such as France and Germany.

The Japanese Yen

Like the U.S. dollar, the Japanese yen is considered one of the safest currencies in the world because Japan has the second largest economy. Japan is dependent on exports to drive its economy, so a weak yen is a benefit to Japanese multinational companies.

The British Pound

Also known as "sterling," the British pound is one of the more volatile currencies in the world, though England has a large, industrialized economy.

The Swiss Franc

The Swiss franc is the official currency of Switzerland and is backed by the country's vast gold reserves. Typically, Switzerland likes to keep the franc strong against other currencies.

Other dollars

Several other countries call their currencies dollars, and the ones worth noting are the Australian and Canadian dollars because of their ties to the prices of gold (in the case of Australia) and oil (in the case of Canada).

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