The Advantages of Investing in Foreign Currency

The world is a large place that is made up of many different countries and each country has their own type of currency. There are currently over 164 different types of currencies in circulation in the world. Many countries will have more than one form of currency; some countries do not actually have their own money, and only use foreign currency. The most common types of currency are the dollar and the euro. The euro is accepted in 35 different states, and the dollar is accepted in 10 different foreign countries. The most traded currency is undoubtedly the US dollar. United States currency is used by 47% of people globally.

Forex is the world’s largest traded market. The market helps determine the current exchange rate. It is estimated that 87% of the market is contributed to US currency, and the euro comes in second place with a 33% daily turnover rate. There are many advantages when it comes to investing in foreign currency; if done right it can have huge rewards. One obscure type of currency that many are investing in is Iraqi Currency; there are a lot of different pros and cons when it comes to investing in foreign currency.

The Market is Always Changing

Many invest in the Iraqi currency because of its low-cost price point; one US dollar is currently worth $1,190,96 IQD (Iraqi dinar). Iraq’s economy is slowly starting to improve as the country continues to modernize by incorporating elements of the western culture and as they continue to work towards strengthening their economic relations with other countries. Investing in another country’s currency can produce huge financial gains if their currency rate improves. It’s always best for you to invest when the currency rate is at its lowest. Iraq is in the top ten countries of oil reserves in the world. The value of the Iraqi dinar was going strong up until the late 1980’s but its value diminished significantly during the Gulf War, and continued to decrease in value. The good news is the country’s economy has been able to recover substantially since the fall of the of Saddam Hussein’s regime. Iraq has since been able to rebuild many of its oil production facilities that were destroyed during the war with the United States. With a steady oil supply, the country’s wealth will only increase.

Explore and Evaluate Your Options

There are many other countries besides Iraq whose currency is worth investing in, such as New Zealand which usually has a high exchange rate. You could also consider investing in Singapore currency, also known as the Singapore dollar. It is currently one of the most stable currencies in all of Asia. Singapore continues to be a major international financial hub for investors and bankers, which is why the country has over 100 commercial banks. Poland is another promising country when it comes to investing. It may not be the most conventional option, but the Polish Zloty is in strong demand. Poland is a country with little debt and its economic growth continues to increase

The Pros and Cons of Investing

Pros

  • Low Cost: One of the greatest things about investing in foreign currency is, unlike stocks, you do not have to pay any type of brokerage commissions.
  • Fast Returns: Compared to every other type of financial market, the currency exchange market produces the highest value in liquidity with a market that is continuously rotating. There is never a risk of stock manipulation.
  • Short Selling: In many markets, short selling may be a bit frowned upon, but it’s a lot different when it comes to investing in currencies. Currencies have to be bought and sold as pairs, so if a trader decides to buy one currency, he’ll also be selling another.

Cons

  • The process of determining the price: Currency rates are influenced by a variety of factors, many times global politics will play a part in determining the valuation. This is why it can be a bit difficult when it comes to evaluating currency prices.
  • High Risk: There is a good amount of risk involved when it comes to investing in any sort of investment. You could invest one dollar and be 50 to 100 dollars richer, but you can just as easily invest 100 dollars and have it only be worth one dollar the next day.