Most foreign currency transactions include the currency from which country as a vehicle currency?

• A. Switzerland
• B. United States
• C. Japan
• D. United Kingdom

Answer: (B)

Verified step by step guidance

1. Understand the concept of a vehicle currency: it is a currency that is widely used as an intermediary in international trade and foreign exchange transactions, even when it is not the currency of either party involved.
2. Identify the most commonly used vehicle currency in global foreign exchange markets, which is typically the currency that is most stable, widely accepted, and trusted internationally.
3. Recall that the United States dollar (USD) is the dominant vehicle currency due to the size of the US economy, the liquidity of its financial markets, and its widespread acceptance.
4. Recognize that other currencies like the Swiss franc, Japanese yen, and British pound are important but are not as widely used as vehicle currencies compared to the US dollar.
5. Conclude that the currency from the United States is the most common vehicle currency in foreign exchange transactions.