Safest Currency?

1echidna

I suppose if anyone knew, that currency would be marked up and no longer a bargain.

bendix

How anyone thinks the Yen is a good investment is beyond me. Their economy detracted over 6% last quarter and interest rates are next to zero.

It's strength over recent months was a technical correction and easily explained. It was an unwinding of the carry trade. Over the last few years Japanese investors borrowed cheap money in their own country and invested it in high interest countries like Australia, New Zealand and Iceland. They made a big profit, but the outflow of funds from Japan caused the Yen to weaken.

Now those positions are unwinding. Interest rates have fallen, meaning Jap investors are repatriating their money back to Tokyo, in the process selling Aussie dollars, Kiwi dollars etc as their interest rates have declined, and - in the process - pushing up the value of the Yen.

it is purely temporary and has virtually stopped already.

The Yen is fundamentally weak.

Degenerate

jago25_98 wrote: »

I'm guessing you are saying that both Iceland and Hungary tried to use alternative currencies to avoid inflation from money printing? I can't find much info on this

No, what I mean is that the residents of these countries borrowed in foreign currency to avoid the high interest rates in their local currency, and then found out how UTTERLY STUPID it is to indulge in foreign currency speculation with your livelihood, when exchange rate changes made their mortgages rocket.

The same risk applies to savers, if the Sterling rises against the currency you choose, you could lose a lot of money. What's wrong with the pound? You talk as if it's been falling - that was last year's news.

lostinrates

StevieJ wrote: »

I bet the old Italian Lira would have tonked them both with its hands tied behind its back

Old Italian lire?;)

bendix

Degenerate wrote: »

No, what I mean is that the residents of these countries borrowed in foreign currency to avoid the high interest rates in their local currency, and then found out how UTTERLY STUPID it is to indulge in foreign currency speculation with your livelihood, when exchange rate changes made their mortgages rocket.

quote]


Just as signifantly, the iceland kroner was spectacularly affected by the massive inflows of foreign money invested on the carry trade. British investors, for example, opening Icesave accounts at high interest rates. It was completely unsustainable, and obviously so.

purch

Old Italian lire?

The New Italian Lire will be along in about 2 years or so...

Degenerate

purch wrote: »

The New Italian Lire will be along in about 2 years or so...

I wouldn't even give it that long, from the way the Euro-zone leaders are ineffectually bumbling around in the face of impending disaster. But who knows.

StevieJ

Generali wrote: »

The trouble with the Italian Lira would their slavish adherence to the Catenaccio (door bolt) system - it's just not suited to modern political economics where the trend is to use it after the horse has gone.

Lire Iwas told off too.

lostinrates

Ma the point I was making is that in certain circle the old coin has a certain value.

ETA: but I do feel old. ' LIR'e/a. Pobby told me the other day how much a house in wales would have been ten years ago and I'm heading rapidly and ungracefully towards a birthday I really don't want. Uck.

Wookster

Its a tough call to say which is the smellier turd out of the Sterling, US$ and Euro.

They all have (significant) risks.