US Dollar has been known as the world’s reserve currency. The widely acceptance of the Dollar has made it more spread out with many governments, banks, foreign investors .They have helped to achieve dollar as the world’s dominant currency. In adding to the strength was the economic strength showed by the American economy.As with the case of any tools in the financial sector we would know that there will be boom and weakness, Dollar is the highly required currency for International business. The period by which the dollar now faces would be that of decline. This would not mean to create a panic with it, the dollar would provide more trading opportunities for smart investors.
Some of the key signals that shows us that the dollar is in a declining stage would be the intrest rate cuts by the Federal Reserve, rising commodity prices and National debt, these would be the stages that make investors know that there do exist a decline factor for the dollar. The fall of anything would bring in the rise of something else and here the alternative would be Euro, Pound ? Investors are looking for quality. Lets discuss the example : A tumble in the dollar which is combined with the rising exports and economic growth in India would lead the investors to the Indian Rupee. If there is a problem with the American economy if its in a stagnant stage, then UK and Europe is growing then Pound and Euro would be the safe bet.
Since Switzerland is in Europe but its not a member of the common currency program the currency “Swiss Franc” is now itself one of the important currency who stands the competition with the other most traded currencies. Franc is ranked as the worlds Fifth most traded currency. If we have a look into the commodities most of them are quoted price in dollars, to hedge the fall of the dollar when in a bull market with the commodities, the commodity based currencies like the Australian Dollar will reap the benefits. The recent one would be the Brazilian Real when oil trading comes in. Brazil is rich with natural resources mainly oil.
Trading in the FX market is not for the faint hearts loosing more than their initial investment is not at all a surprise there. So for many it would be better not to poke your nose there.Investors have many other options other than the weakening dollar, there are also methods like hedging to protect your investments. The economy is global and so are the opportunities.
Future Of the US dollar Part 1
Related posts:
If you would like to make a comment, please fill out the form below.
