Asylum Currencies Can Save Traders' Investments
As is obvious from practice, in the most favorable and good economic conditions, investors prefer to invest in assets with a high rate of return. If we are talking about periods of instability, then when they occur, capital investors choose funds for investment in a completely different way, based on reliability and stability.
There are two main instruments on the market - high-yield asylum monetary units. In our article, we will pay attention to the currencies of the second group, which are distinguished by their strength during periods of instability and crisis. They perform a protective function, which is why investors invest their funds in them. As a rule, haven currencies are issued by states with the highest level of economic and political stability. Therefore, we can state the fact that the instrument (currency) that performs the following functions is considered a haven currency: - refers to the state, which has a highly developed economy, as well as the economic condition is stable and stable; - the currency is characterized by sufficient stability, and the country itself, which issues it, is distinguished by its financial power; - it is less prone to depreciation (if we compare it and other world currencies). Based on such obvious advantages, the monetary units under consideration are quite often used as reserve ones.
Let's list the most popular and demanded currencies: 1) US dollar; 2) Euro; 3) Japanese Yen; 4) Swiss franc; 5) British pound. It is also reasonable to emphasize that each of these reserve currencies performs the following functions: - issued by countries with highly developed economies; - available convertible; - is considered generally accepted and is it. In addition, this kind of currency is quoted on the market and is very often used by the Central Bank to form reserves. But not all monetary units of this group can be automatically assigned to the group of refuge currencies, due to the significant volatility of their exchange rate. For example, the pound sterling can (and quite often) be found in the gold and foreign exchange reserves of different countries, but its presence there is primarily due to it. the need to ensure the convenience of calculations.
Basic characteristics of hideout currencies. So, in order, we'll start with Jena. It has long been popular with investors for several reasons. Namely: - the ability to be strong and strengthen even against the backdrop of the most negative events in Japan itself. - rather increased attractiveness of crosses against profitable currencies (Australian, Canadian, and New Zealand dollars); - strengthening against the backdrop of negative events that relate to resource-based economies. But the Swiss franc is also notable - the second haven currency, which is deservedly one of the most stable and reliable monetary units. This position of the franc is explained: - the stability of the economic situation in the country; - excellent state of the banking industry in the state; - the neutrality of the state (it lasts more than two centuries).
The US dollar is not only one of the main and first world monetary units, but also has sufficient reasons and factors that make it one of the most popular, attractive, and sought-after haven currencies for global depositors. But among the major currencies are the following:
1) one of the largest economies. If there is a threat of a global recession, then the American authority comes out on top: the United States is the most developed world state with huge production volumes.
2) the factor of political security The American system is stable and the likelihood of coups and the like is practically zero. This is important for investors.
3) a very powerful financial sector of the state It is thanks to the well-known financial centers of the country that the United States deservedly takes on the status of the world's leading currency repositories.
4) reserve currency;
5) High level of liquidity; 6) resistance to risks.
Asylum currencies, quite logically and reasonably, are one of the best market instruments that allow you to preserve investor capital in times of market volatility.
It is they who have a certain «gift» to save our savings in times of crisis and economic turmoil.