International diversification to protect your savings against a currency crisis.
Between September the previous year and June this year, Pedro had lost 74% of his savings measured in dollars. He was holding the savings of his family in cash. Stock markets were falling all over the world. Inflation was shooting up and live was becoming much more expensive every day. It was crisis.
Up until recently we all were led to believe that only 5% of people make it in the Forex trading world. Since the new laws by the CFTC, brokers have had to come clean about the percentage of their clients that wins.
Most have a winning percentage of around 25% to 30% with some up to 50%. So the "only 5% make it" is a myth! Now I am not 100% convinced on the figures they released but they are better than previously thought. This led me to question why still 70%+ fail at this business.
The Current Account deficit for the US is at this moment $123 billion per quarter and 3.3% of GDP. This is less than the 6% in 2006 but still at a level that most economists consider to be unsustainable in the long term. The decline is probably caused by the economic situation and could be temporary. So, what does this mean and what is ahead for the US?
In this article we focus on what the consequences could be for the US given its large Current Account deficit and the factors that are driving this deficit.
Large Current Account deficits are rarely a positive symptom. They reflect often an underlying economic situation that can be unsustainable. The US has a large Current Account deficit. What are the possible drivers for such a large deficit?
This article focuses on the economic symptoms or situations that could lead to a large Current Account deficit.
Central Banks have few options to manage the currency in case of a Current Account deficit. Such a deficit is financed by a Capital Account Surplus. This can be done via higher incoming investments or lower foreign currency reserves. In case of Current Account surplus, the Central Bank will have the option to keep its currency artificial low in the eyes of the rest of the world. How does that work?
This article focuses on the impact of a deficit or surplus of the Current Account on the Capital Account and the domestic currency.
Do you understand how Public Deficits, Foreign Debts, trends in Currency Exchange Rates and Current Account Deficits impact the investment opportunities in the different markets around the world? To do so, a sound understanding is required of each of these economic concepts and how they interact with each other.
This article is a first in a series of five that explains the economic concepts of Current Account, Capital Account and Reserve Account and how they relate with foreign debts and public deficits. If you are interested to get an understanding of how the economy works, how money flows between nations and its impact on currency trends and the economic well-being of nations, please read on.
The question on why the Japanese Yen is now so strong against the U.S. Dollar is asked repeatedly the last few weeks, months and years.
The Yen reached recently a 15-year high against the Dollar. Was this in line with expectations? What is happening and what is causing this? Here are the analysis and conclusions on why the Yen is so strong.
This chart for the EUR/USD exchange rate and trend shows a 20 year history. Since the Euro exists only for about 10 years we had to make some calculations. You will see later below. 20 years provides a unique historic perspective.
Trends in currency exchange rates are important for investors who invest outside their home currency zone. A foreign stock market index could move up but the currency for that market could devalue compared to your home currency. In that case, your gains measured in your home currency would reduce or could even turn negative.
There is a recent trend that non-professional investors step into the currency trading. The major shifts that the US dollar has made versus the Euro during the last year are probably the reasons for this. Why should you be very, very careful before starting to trade in currencies and what can be the impact of currency fluctuations on investors in stocks and funds.
The exchange rate between currencies is developing 24 hours per day. This exchange rate is the price you need to pay in one currency for another. For example, at the time of writing, one needs to pay 1.37 US dollar for every 1 Euro.