9 Safest Currencies for Saving and Investing Money
The goal of this blog post is to answer a simple yet profound question: what are the safest currencies to invest in? Currencies are among the most volatile investment vehicles in the world, perhaps because they are affected by global and local events.
What you should be looking for in a currency, besides stability in times of market disruptions, is liquidity. This is what makes for a vibrant currencies market. Go for big in-demand currencies that are popular in both stable and tumultuous times. The safest currencies should withstand market disruptions; they should rise in value even when others are declining.
Below is a list of the nine safest currency for saving and investing:
Currency #1: The US Dollar
While the US dollar is perhaps the most popular currency in the world, it is constantly under pressure from global and local markets. Although it is extremely volatile, it is stable and predictable during uncertain times in the global markets. When national currencies are affected by inflationary tendencies, investors tend to hedge their bets on the US dollar. Doing currency exchange with the US dollar is always a reliable investment.
The value of most international currencies is pegged on their ability to withstand the dollar. In some cases, nations devalue their currency against the dollar to promote international trading. A strong local currency is, in most cases, deemed harmful to an economy that relies on dollar-driven foreign investments.
Currency #2: The Swiss Franc
The franc is among the safest currency for saving and investing. Switzerland is a stable country with a solid, trustworthy and reliable banking system, making its Swiss Franc one of the safest currencies in the world for years. Recently, however, the SNB has made the unpopular move of unpegging the Swiss Franc from the euro and also increased interest rates. This move has made the currency costly and difficult to invest in.
Currency #3: Singapore Dollar
Another great currency to invest in, the Singapore dollar’s strength is informed by the fact that the country is among the most financially and politically stable in Asia. This has made Singapore a major trading and banking hub in Asia.
Currency #4: Polish Zloty
The zloty is an unusual trading currency to invest in. However, investors prefer it due to Poland’s low national debt. It is also informed by the fact that the economy of Poland is very strong. The Polish government has also placed a constitutional ceiling on borrowing. Besides, Poland’s economy is driven by internal demand. This insulates the financial sector from the currency volatility in the rest of Europe.
Currency #5: Gold
Although technically gold is not a currency per se, it has enormous value. For thousands of years, investors have banked on gold as a solid investment haven that is safe and unaffected by market upheavals. Besides, it is controlled by central banks or central governments. Buying gold is a straightforward process, making it a favourite among investors.
Currency #6: Cryptocurrency
These are all digital currencies that are becoming extremely popular among investors. Bitcoin is currently the most popular cryptocurrency. Cryptocurrencies are not controlled by a central authority. However, numerous merchants around the world are adopting it. It has a limited supply of twenty-one million coins.
What this means is that there will never be more than 21 million bitcoins in circulation, making it deflationary, unlike other currencies. It, however, has a couple of downsides. Most importantly, it has only been in the market since July 2010. For this reason, it is riskier to invest in than gold.
Currency #7: Norwegian Krone
The krone is another safe currency to invest in. This is informed by the stability of the Norwegian government. Besides, the balance sheet of the Norwegian central bank is very solid, perhaps informed by the fact that Norway does not have a net debt.
Another advantage of the Norwegian krone is that it is a standalone currency. It is not pegged to the euro, neither is it affected by global volatility. So, if you are looking for a go-to safe-haven currency to invest in, the Norwegian krone makes great sense.
Currency #8: The British Pound (GBP)
The GBP has lately had a bumpy ride. Despite the Brexit uncertainty, it finished 2019 stronger against the euro and the US dollar. After Brexit, investors expect the British Pound to be exposed to other influences besides politics. The country’s trade deals post-Brexit will inform the stability of the GBP. So, this is a wait-and-see currency as the financial sector in Britain evolves to embrace a post-Brexit reality.
Currency #9: Japanese Yen
JPY is an attractive investment vehicle for investors. In uncertain times, investors have a history of moving their funds to the Yen. As a result, Japan’s current account surplus is large, making the Japanese Yen an extremely safe currency to invest in.
It is immune to the volatility of global markets. It’s a standard against which the global currency markets are measured. A strong JPY is an indication of currency turmoil in the global market.
Among events that dictate a currency’s value include political upheavals, interest rates, natural disasters, inflation, international trade, economic news reporting, and pandemics. Any of these issues, or a combination of them, could cause a currency to rise or fall. Sharp rises and declines are highly disruptive. You want a currency that is stable and predictable over a certain period, even with market disruptions.
