Hi my dear fellow traders. We do not often talk about fundamental analysis on this website, however, as the example of the Ruble and the US Dollar pairs last year show, we cannot have a complete picture of the Forex market without the fundamental analysis. In this article, we will talk about three currencies that you should pay attention on in the coming years, as they will grow and may grow very strong.
The US dollar and the Euro are doomed.
Why is that? Because in addition to the fact that their countries are showing slow progress, they are still burdened with debilitating debt; they were victims of a huge increase in the money supply.
As a result, a serious inflation and the devaluation of both currencies is very likely to happen in the coming years.
Even if the United States did not increase their already bloated debt, the interest on it, combined with a massive printing of money, virtually guarantees higher prices. The same goes for Europe, the region where the money printed out of thin air to provide financial assistance to their weak countries and banks.
However, you can play on the fall of the dollar and the euro and take advantage on the fall of their economy.
As you can see, the situation is rapidly creating a new order for world’s currencies. In particular, three currencies ready for revaluation and we may soon see their enormous upward movement.
3 currency stars of tomorrow
There are three currencies that you should now include into your Forex trading portfolio.
Based on the solid fundamentals of countries that demonstrate economic growth without any artificial monetary stimulus, these three currencies operate on an entirely different playing field in relation to the US Dollar and the Euro.
According to the plan they will undergo a huge reassessment in the coming years. Let me show you why.
Currency number 1 – The Chinese Yuan
As the Dollar and the Euro are falling, the Chinese are beginning to invest in Yuan whose value increases. They invest in things like mines, factories, and natural resources that makes their economy stronger and increase the price of the local currency Yuan.
At the moment, the Yuan is considered to be a good opportunity for buying. Of course, the Chinese government deliberately sets artificially low exchange rate of Yuan that prevents it from being freely traded on the world’s markets.
As the world stubbornly opposes such policy, the Chinese will have to significantly increase the value of Yuan over the next years. Why is that? In fact there are two reasons…
1. The Chinese are not only producing goods and services in a large scale but they are also large consumers. This means a reduction of dollar reserves and increasing the number of Yuans that will be invested abroad.
2. The Chinese will be forced to reevaluate the Yuan more frequently and in greater numbers. Earlier the country was unable to do that, because it was accumulating US dollars all the time.
These two factors will increase the value of the Yuan in the coming years.
According to the forecasts, the growth potential of the Yuan will be 20% against the US dollar in five years.
In Forex trading the Yuan is traded against US dollar as USD/CNH.
Currency number 2 – Indian Rupee
After the Rupee has fallen by more than 20% against the US dollar over the past five years, it can now be bought at a good price of an absolute minimum.
Indian Central Bank strongly controls the Rupee. Thanks to the efforts to fight the financial crisis, as well as to make Indian goods and services more competitive on the market, the local currency has depreciated.
As a result we have got an artificially weak Rupee, which will be strengthened due to the trend of world’s economic growth and cash flow.
Due to the growth of India’s GDP, which in the coming years, outstripping the growth of the economies of the western countries, India will have to raise interest rates to quell inflation.
In the past, it was not a problem, since India was not a global player, before it has started importing goods and services. It was a closed, isolated economy in which most people buy products and services at the local level.
Currently, India’s middle class population is about 400 million people therefore the country starts importing an increasing a number of products. This will lead to inflation, which will force the central bank to tighten monetary policy.
I am predicting a 25% increase in the Rupee against the US dollar in five years.
In the Forex market Indian Rupee can be traded as USD/INR
Currency number 3 – Canadian Dollar
The Canadian dollar has a bright future. For a start, Canada is rich in natural resources such as oil, timber and gold. With the prospect of global growth all three resources are in huge demand in developed and developing countries – a trend that will continue for many years.
Canada also has strong financial and budgetary authorities. Its AAA credit rating is safe, as the country quickly solves its debt problems. As a result, over the past decade, the Canadian dollar has almost doubled in relation to US Dollar.
In addition, Canada does not need to save its banks and its financial system as a result of the practice of preferential credits. On the contrary, thanks to their financial stability, currently a lot of Canadian banks open their branches in the United States.
In short, Canada has many advantages. It is a big supplier to the emerging markets, it has a strong and stable financial system and the government.
As well as the Chinese Yuan and the Indian Rupee, keep your trades for a long period of time, and you can get a profit of 20% against the US dollar in five years.
In Forex trading, the Canadian dollar is traded as USD/CAD.
Remember that we are talking about currencies and a movement of 10% -15% is considered to be enormous. But these three currencies in the coming years will make a new order in the Forex market.
The best way to invest in the Yuan, Rupee and the Canadian dollar is opening long-term positions with your Forex broker. Do not buy everything at once. Wait for the buying signal according to your trading strategy.