Play against the dollar and win
Over the past few decades, the dollar its fame as the world’s reserve currency. Foreign investors and central banks to buy dollars and debt securities issued by the US government, assuming that the dollar is the dominant world currency and profit on dollar investments will be ensured thanks to the power of the American economy. In general, these assumptions proved correct, although investors should not forget that the currencies are traded like shares and other financial instruments, that is, from time to time periods of growth alternating with periods of falling.
Thus, despite the high demand for the dollar in the world of investments, sometimes the US currency is experiencing some difficulties. However, the depreciation of the dollar – not a reason to panic. Experienced investors can take advantage of the temporary weakness of the US currency, and profit from it. Moreover, over time, ways to earn on the decline of the dollar is growing.
What to do when the dollar falls
In general, there are several key features of the upcoming fall
dollar. In general, they include a steady decline in the Fed interest rates, public debt growth and higher commodity prices, particularly gold and oil.
The falling dollar, after all, often results in other key growth
currency, which is associated with switching to them the attention of investors.
For example, the dollar’s decline in the amount of exports to the growth and acceleration
Japan’s economy is driving demand for the yen.
On the other hand, if the US economy is a period of stagnation, and
Europe and Britain “in bloom and smell”, the role of safe haven can take
the euro and the pound. Furthermore, as an option for investment
you can see the Swiss franc. Although Switzerland is in Europe,
the country is not part of the euro zone and likely never will.
In addition, the Swiss government along with central bank
It is making every effort to support the franc at a high
level in relation to other currencies. For example, in April 2011
the Swiss franc was the fifth most popular currency in the world after the euro,
the yen, the pound and the “Aussie”.
What patterns is necessary “to know in person”
Tracking the fluctuations of the dollar? Do not lose sight of the raw material assets
Given that most of the raw materials is quoted in dollars,
to understand where the US currency moves, investors need to monitor
fluctuation of several types of raw materials. For example, the increase in oil prices usually
It leads to a decrease in the dollar, as the purchasing power
in this case the dollar melts. To protect against falling dollar
terms “bull” market of raw materials, pay attention to the commodity currencies to
which include the Canadian and Australian dollars.
Rising prices of precious metals such as gold, for example, go to
benefit “Australian”. The Canadian dollar benefited from higher prices for
Another of the options is the commodity currencies, the Brazilian real. AT
2011 Brazil is the world’s seventh largest economy.
The country is rich in natural resources, especially oil.
Huge choice of options when earnings fall in the dollar
Trading on the foreign exchange market may not be so simple occupation:
The fact that the daily volume of foreign exchange trading volume exceeds
transactions in the US securities market. investors need
to understand that trading in Forex, they can lose a lot more than
invested. For most the best option would be to leave it
professionals and look for other options to profit from falling
dollar. Fortunately, opportunities abound for this.
Alternatively, you can pay attention to the dollar index, which
It reflects the performance of the greenback versus a basket of major currencies. Index
updated around the clock, seven days a week and is traded on the
The New York Mercantile Exchange.
In addition, there is a sea of mutual funds that follow the
foreign bonds or open short positions in the dollar against the
other currencies. These funds give investors the chance to diversify
portfolio, it does not get a headache in the form of need
continuous monitoring of daily fluctuations of currencies.
Shares of both foreign and national companies open
additional possibility of earning on the dollar fall. If the forecast
shares of the US market pessimistic, there are a number of ways
it is advantageous to use. Undoubtedly, there are American
actions that could benefit from a falling dollar. major international
companies that operate in foreign markets, while reducing the win
dollar at an exchange earned abroad pounds or, for example,
yen. These companies include Procter Gamble, General
Electric and PepsiCo.
Investors do not always suffer from a decrease in the dollar quotes.
There is a huge number of possibilities to protect their investment, and
effective hedging can be not only protection, but also a source of
arrived. In addition, the global economy has a number of global
features that allow investors to sleep during periods of dollar decline
a little calmer.
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