Where to go when the dollar falls.
February 21st, 2010
Usually there are some key warnings indicating that a dollar decline is coming. A consistent pattern of cuts in key interest rates, carried out by the Fed (Federal Reserve), an increase in national debt and the price of commodities (Commodity), especially in gold and oil. All these factors can help investors to identify potential risks to the dollar.
And when the dollar falls it probably means that other currencies are rising because investors go into a group where quality is perceived. For example, a falling dollar combined with increased exports and economic growth in Japan would lead investors to the Japanese yen. On the other hand, if U.S. economic growth is stagnant, but both Europe and Britain are doing well, the euro and sterling
become safe havens for foreign investors. (To get a better understanding read: Top 8 Most Tradable Currencies - The 8 most actively traded currency.)
Another option to consider is the Swiss franc. Although Switzerland is in Europe, it shares the common currency, and probably never will. Additionally, the Swiss government and central bank carried out meticulous efforts to keep the franc strong compared to other currencies. Thus, in 2009 the franc was the fifth most actively traded currency in the world, following the dollar, euro, pound and yen.
Tags: British Pound, euro, Swiss Franc, yen