The two most promising currencies that hold stability and value.
The UK Sterling Pound, the US dollar, and the European Euro are perhaps the three most popular and valuable global currencies, but their relative stability and value in relation to other least popular currencies may be diminished based on a one on one comparison. Holding currencies for the sake of trading or holding value in the long term is often focused on the strongest and most stable currencies.
For a long time now, traders have been more interested in the US dollar than any other currency because of its widespread acceptance and preference in trading due to its relative stability and value. But the USD has lost about a third of its value. This implies that traders that have held their savings in liquid USD have been compelled to earn 36+% returns to protect their principal and break even. Inflation can be blamed for this loss of value.
However, what is never clearly said out there is that some other currencies have been rising in value while the USD has been eroding. In economic analysis, global currencies are akin to seesaws and as some currencies depreciate others have to appreciate. As such, stating that the USD has lost value is an incomplete analysis. Instead, the analysis should show how the USD has fallen in relation to other currencies. In spite of the seemingly bleak future for the USD, traders getting wary about the USD can get comfort in other currencies that are rising in value and stability. Read on to the get the insights about two of these currencies.
The Swiss Franc
In the past 10 years, Switzerland’s Francs has increasingly grown in value and stability against the USD. In the past 3 years, the Franc has grown by 17% in value when compared to the US dollar. A steady decade of increase is indeed something to reckon in the financial world for any currency. The nation’s development and the ability to avoid global militarism and the urge to arm itself has helped it focus on economic development, which has led to the stability of its economy and currency.
The nation is well-known for its confidential banking, modern financial service sector, and low inflation, which has attracted most people that want to find a safe economic haven to store and invest their vast wealth. In global upheavals, Switzerland is considered a safe haven for wealth keeping because the nation has one of the strongest and stable currencies in the world. In fact, the Swiss Franc has been one of the major beneficiaries of the Middle Eastern tensions and the Japan nuclear disaster.
The Australian Dollar
In the past ten years, the Australian dollar has grown in value by 102% against the USD. Unlike the Swiss Franc that has just increased by 17%, the staggering growth of 102% of the Aussie dollar is indeed something promising for currency traders, investors, and other traders such as importers and exporters. Australia’s economic development, stability, and high currency value can be attributed to the fact that the nation is rich in resources and it is the third largest miner of gold – which is indeed another stable currency’ in its own kind has an exchange of value. The nation’s currency is a commodity currency, and as long as the prices of commodities rise, the nation will fare well.
In fact, the nation navigated the recent financial crisis in the world unscathed. The Reserve Bank of Australia took a bold step in confronting the financial crisis through the raising of significant interest rates in 2009, which is different from the US Federal Reserve’s easy-money policies that in the end yield little to no good. In addition, the Aussie stock market performs better than most other global stock markets, and this a promising thing for the Australian dollar’s value and stability. However, as an interested trader or investor, it is prudent to note that the Aussie dollar is a commodity currency, and the dependency on commodity prices is a form of a risk factor.
The risk may arise if commodity prices or demand change tremendously because such changes would have a significant negative impact on the economy and the Australian dollar. The slowing growth of China should, in fact, be a great concern because the demand for commodities may plummet yet Australia and China have grown to become big trading partners.