Top 5 Currencies to Watch in 2019
The US dollar and the Euro have long been some of the strongest currencies, and the ones which the rest of the world compared itself to. Check out some of the top currencies to watch in 2019, which could change your fortune easily.
However, with recent instability in both markets and both countries, you may be wondering about other options. Some of your other options for investing in currency in 2019 and the markets in BRIC countries lend themselves to becoming the new solid foundation.
Top 5 Currencies to Watch in 2019
- Singapore Dollar
- Brazilian Real
- Russian Ruble
- Indian Rupee
- Chinese Yuan
1. Singapore Dollar
Not one of the BRIC countries but still an interesting emerging currency market. The Singapore dollar has been rising strongly over the last few months. In fact, since the collapse of Lehman Brothers in 2008 the Singapore dollar has risen. It has risen by 11% against the US dollar, 14% against the Euro and 25% against the pound.
Despite this recent show of strength, the Singapore dollar still has a lot of room to grow. It has the potential to grow even further, and the country’s Finance Minister believes the idea. The idea is that in letting the Singapore dollar appreciate, he can help battle inflation. Inflation already risen faster than expected, after reaching a two year high early in the year.
Why Invest in Singapore Currency
The Finance Minister has also revealed that the country has experienced strong economic growth. They thank to their export market. This is good news for a rising currency because with positive economic growth, there is no need for currency interventions.
2. Brazilian Real
Brazil is working hard to prevent the Real from appreciating, and has implemented direct dollar purchases on the forex spot market, a tax on foreign investments and an increase on the reserve requirements on banks’ forex positions, where Brazil is not the only BRIC country to implement this last measure, as it is similar to the approach taken in China.
The Brazilian Real has still managed to show strong growth, breaking through the 1.65 level against the US dollar, and achieving its highest level since August 2008. This equates to a 38% surge by the Brazilian Real against the US dollar.
Why Invest in Brazil Currency
The Brazilian government is still looking for new ways to combat appreciation of its currency. The Real remains an attractive currency investment option thanks to high interest rate expectations.
Since February, inflation has risen to more than 6% mean future interest rate increases are inevitable. THe inflation having already seen five interest rate increases since last April, the official rate is already at 11.75%.
When you compare the Brazilian interest rate with that in the US, UK, Japan and the Euro zone, the rates in these countries are no more than 1%. This means that while the Brazilian government can try and control its currency, the high interest rates make it attractive for investors, who are confident the Real will continue to rise.
3. Russian Ruble
There is already a significant interest in Russia from foreign investors, for example, the planned $10 billion private equity fund will be funded primarily by foreign capital and promises returns of up to 20% from investments in technology and pharmaceuticals.
Russia is an energy rich country and is looking to diversify its $1.3 trillion economy so as not to be entirely reliant on the hydrocarbon sector. The proposed equity fund is expected to improve foreign capital inflow and attract cash rich sovereign wealth funds and international private equity funds.
Why Invest in Russian Currency
Typically investors have shied away from Russia because of its reputation of being corrupt, and its lack of consistent laws. However, President is expected to deliver on promises to fight graft and red tape.
Russia is working hard to promote modernisation and innovative development in attracting new foreign investors, while maintaining foreign direct investment and a strong economy and growth, making it an investment market to watch.
4. Indian Rupee
Even though India is ranked down at number 11 among the global economies, it has a high nominal Gross Domestic Product, and industrial output figures which can rival those of China which has the second largest economy, making the Indian Rupee a currency to watch in 2019.
From the beginning of 2019 India’s industrial output increased by 3.7% year over year, after already seeming an increase of 2.5% in December 2018. The Indian economy also expanded by 8.2% during the third quarter of 2018.
Why Invest in Indian Currency
Now could be the perfect time to invest in the Indian Rupee against the US dollar as it has dropped lower recently, below the Singapore dollar, making it a bargain investment.
However, thanks to a possible interest rate increase, the Rupee won’t stay down for long. Rising inflation is likely to prompt the Indian central bank to increase interest rates by 0.25% very soon and that increase will be the eighth increase in the last 12 months.
5. Chinese Yuan
China is another emerging market which can offer refuge for investors looking to escape the western markets which are still struggling with sluggish growth and record low interest rates.
In China, the GDP growth has been 10.3% in the past year and inflation has increased to 4.6% which is well out in front of the government’s target. While these figures can mean good news for investors, you will also want to look for stability which leads to long term growth.
According to the Chief Investment Officer of Advance Emerging Capital, $94 billion was invested in emerging markets last year, and this coupled with a generous stimulus package has meant that China is experiencing an outstanding boom time.
At the same time wages are increasing rapidly, where Beijing has increased its minimum wage by 21% in response to a similar rise in the inflation levels.
Why Invest in China Currency?
While this boom in China could be seem as a bubble, and not one you’d like to be invested in when it bursts, now is still a good time to look at investing in China. Inflation is predicted to fall in the second half of 2019 to curb the rise in the price of food, and a moderate growth of around 8% is expected.
China is currently finalising its twelfth five year plan which will ensure the country focuses on self reliance, reduced dependence of exports, in particular from the US, and greater environmental awareness, making it a strong and sensible investment option to watch in 2019.