forex trading outlook today - best currencies to invest in 2012 : If 2011 taught us one thing, it's that currency investing can be a dangerous business. For instance, the euro - the simplest of hedges against a declining dollar and the U.S. Federal Reserve's expansive monetary policy - has run into difficulties, losing billions for even the most sophisticated Wall Street banks.
But that's not all. The Brazilian real, which was one of the best performing currencies of 2010, has dropped back sharply in 2011. Still, if you harness the lessons of 2011, you can take advantage of the new opportunities set to emerge in 2012. In particular there are three currencies every investor should own.
To that end, the three must-have currencies of 2012 are as follows:
The Canadian Dollar (CAD): Canada is a close neighbor, but distinguished from the United States in having a sound banking system, a much smaller budget deficit, and huge energy and mineral wealth. The Canadian dollar had risen as high as $1.06 in the early part of 2011, but has since drifted back down to about 98 cents. At that level, it has further to rise and is an excellent hedge against any severe problems in the U.S. economy.
The Chilean Peso (CLP): Like the Canadian dollar, the Chilean peso benefits from rising resource prices. Better still, Chile is by far the best-run country in Latin America, with a Transparency International Corruption Perceptions Index rating better than that of the United States. The next election is not until December 2013, so political stability is assured. The peso has fallen about 8% this year on fears about emerging markets, but Chile's current account deficit is less than 1% of GDP. It has virtually no government debt and a large trust fund to cushion against shocks (such as last year's earthquake, for example).
The South Korean Won (KRW): The won is a hedge against problems in the United States, but also against a collapse in commodity prices. Contrary to the Japanese yen, the won has fallen about 20% against the dollar since 2007, and is flat on the year. However, even with high commodity prices, Korea runs a substantial current account surplus. It also runs a budget surplus with the lowest amount of government spending in the Organization of Economic Cooperation and Development (OECD) group of rich nations. So it is fabulously strong economically. The only potential weakness comes in the form of an election next April, but even the opposition in Korea is thoroughly pro-market and should cause few problems.
So there you have it. These are the three currencies investors must own in 2012. Stick with them and avoid the likes of the dollar, euro, yen, and pound. If you do, you'll be set for a far more rewarding year in 2012.
But that's not all. The Brazilian real, which was one of the best performing currencies of 2010, has dropped back sharply in 2011. Still, if you harness the lessons of 2011, you can take advantage of the new opportunities set to emerge in 2012. In particular there are three currencies every investor should own.
To that end, the three must-have currencies of 2012 are as follows:
The Canadian Dollar (CAD): Canada is a close neighbor, but distinguished from the United States in having a sound banking system, a much smaller budget deficit, and huge energy and mineral wealth. The Canadian dollar had risen as high as $1.06 in the early part of 2011, but has since drifted back down to about 98 cents. At that level, it has further to rise and is an excellent hedge against any severe problems in the U.S. economy.
The Chilean Peso (CLP): Like the Canadian dollar, the Chilean peso benefits from rising resource prices. Better still, Chile is by far the best-run country in Latin America, with a Transparency International Corruption Perceptions Index rating better than that of the United States. The next election is not until December 2013, so political stability is assured. The peso has fallen about 8% this year on fears about emerging markets, but Chile's current account deficit is less than 1% of GDP. It has virtually no government debt and a large trust fund to cushion against shocks (such as last year's earthquake, for example).
The South Korean Won (KRW): The won is a hedge against problems in the United States, but also against a collapse in commodity prices. Contrary to the Japanese yen, the won has fallen about 20% against the dollar since 2007, and is flat on the year. However, even with high commodity prices, Korea runs a substantial current account surplus. It also runs a budget surplus with the lowest amount of government spending in the Organization of Economic Cooperation and Development (OECD) group of rich nations. So it is fabulously strong economically. The only potential weakness comes in the form of an election next April, but even the opposition in Korea is thoroughly pro-market and should cause few problems.
So there you have it. These are the three currencies investors must own in 2012. Stick with them and avoid the likes of the dollar, euro, yen, and pound. If you do, you'll be set for a far more rewarding year in 2012.
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