Tuesday August 29, 2017 - 18:22:36 GMT
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What Are the Best Emerging Currencies to Invest in?
When it comes to currency trading, there are a number of derivatives that immediately stand out.
These are major currencies such as the U.S. Dollar (USD), the British pound (GBP) and the Euro (EUR), each of which dominate the activity of traders across the globe. In fact, estimates suggest that 80% of all global trades include the greenback, so this remains the single most popular currency in the world.
We have seen emerging currencies earn greater credibility since the Great Recession in 2008, however, as investors have increasingly looked to diversify their portfolios.
How Emerging Economies Are Measured
If you are interested in trading emerging currencies through an online platform such as Oanda, you will need to familiarise yourself with the so-called BRICS. This is an an acronym for five emerging economies that have enjoyed exponential growth in their gross domestic product (GDP) despite the economic and social challenges that have gripped the world during the last decade. These countries also continue to be economic leaders in the world, competing with major and better-resourced countries.
These economies are Brazil, Russia, India, China and South Africa, with the latter being added to the group in 2011. They all rank in the top 30 GDPs in the world, while China even tops the whole list with a gross domestic product of $19.5 trillion. India is third with a GDP in the region of $7.9 trillion, while Russia is sixth with a value of $3.5. Brazil trails in seventh with a GDP of $3.1 trillion, with newcomers South Africa boasting a total of $723 billion.
While the GDP of these countries offers an excellent insight into their economic health, so too do their domestic currencies. In the case of emerging economies, the value of money is measured by comparison with major currencies, including the USD, the EUR and the GBP. The Japanese Yen (JPY) is also a popular metric, thanks to its relative stability and reputation as a secure store of wealth. Renowned for increased volatility and pronounced price movements, emerging market currencies are popular as they enable traders to profit even in a depreciating market.
The Last Word
This is why emerging markets and currencies enjoyed such growth in the wake of the Great Recession, while there is no doubt that the BRICS nations offer the best value to investors. By building your trading strategy around one or more of these five currencies, you can generate profit in an increasingly volatile and uncertain economic climate.
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