One of the effects of the current economic situation the world is experiencing at the moment is the notable appreciation of the US dollar against the euro. Aspects as relevant as those that are happening in Argentina or the rebound in the oil price it is causing a strengthening of the North American currency. This exchange rate movement has positive and negative effects on your personal finances from now on and you will need to know them so that you can take advantage of this very special situation that arises in the foreign exchange market.
Until a few days ago, the general scenario is completely different. In other words, a greater strength of the euro against the dollar. But since the instability has moved to Argentina and the Middle East, the scenario has changed substantially. One of the reasons to explain this fact is based on the fact that the currency of the United States exercises shelter value under pressure from financial markets. Where a good part of the monetary flows of investors are directed towards this important financial asset. Especially because it offers security to investors.
Of course, the equity markets are not immune to these movements in the exchange rate of the world's main currencies. If not, on the contrary, it has a wide impact that you can take advantage of through the application of certain investment strategies. So that in this way, you can make a profit to your monetary contributions. However, you cannot forget that in the first days it can cause you some confusion about what you have to do with your savings from now on.
Rise of the dollar against the euro
In principle, the strengthening of the United States dollar against the single European currency is neither bad nor good. If not, everything will depend on your ability to react to this new scenario that arises in the international economy and especially in the foreign exchange market. You have a very effective strategy to take advantage of these seemingly temporary movements and that is by going to the currency markets. The reward for your performances may be more than satisfactory, but as long as you recognize that they are operations with a lot of risk.
This risk increases when you do not have a certain amount of learning to operate with these kinds of markets. Because it is completely true that you can earn a lot of money, but for the same reasons you can leave a lot of euros on the way. In this sense, you cannot forget that if the currency market is characterized by something, it is by its high volatility. It is much more pronounced than in other financial markets. As for example, the stock market or those of raw materials or precious metals. This is one of the reasons why you should bring more experience in this kind of investment operations.
Trading operations or very fast
If you want to take advantage of movements On the rise of the US dollar against the euro, the most satisfactory option is to opt for trading operations. Of course it is one of the business opportunities to improve your income statement from now on. Not surprisingly, the currency market is very active and is in full swing every day. Even in the evening hours through the futures based on this financial asset. If you have the necessary experience, you can try to carry out these very special operations, but always with great caution to avoid unnecessary risks.
It is precisely through trading that you can approach the currency market. And how could it be less, improve your positions through the strengthening of the dollar against the euro. Above other kinds of financial products that do not pick up this kind of movements with such intensity. In particular, if the rally in the US currency is not a conjunctural movementIt is perpetuated through the next few months or even years. In which case, it will be much easier to trade these financial assets. You cannot forget this analysis if you want to make the savings profitable from now on.
How does the rise in the dollar affect?
If you look on the bright side, you will have no choice but to contemplate the more positive scenarios for your personal finances. They are much more than you can foresee from the beginning and of course you can benefit while this current scenario that the currency market presents at this precise moment lasts. Well, one of the most direct effects of a rebound in the American currency resides in the fact that imports within the European Union will benefit.
This action will cause companies listed on the variable income and that they do not have a strong export component can improve their positions in the financial markets. It is precisely to that class of securities where you have to go if you want to make the savings profitable. Because their behavior will be better than with respect to listed exporting companies. Not surprisingly, they will suffer the weight of a dollar much stronger than before. That is, everything will depend on the values of the stock that you select from now on.
More expensive imported products
On the other hand, there is the opposite effect. That is, how this scenario can harm you in the currency market. One of the most damaging formats is the one that has to do with the fact that the products you buy will be more expensive than before. Because indeed, Spanish consumers their purchasing power will be reduced, since they will pay more money for imported products. Some sectors that depend on these products are: food, pharmaceuticals, textiles, electrical appliances and vehicles. To the point that it will also be reflected in the equity markets.
Another aspect that may be affected by the situation of the American currency is that derived from your Trips abroad. To the point that those people who travel to the United States for work or pleasure, will pay more money for their plane tickets, lodging rates and all the expenses that are made towards this tourist destination. In addition, you can not forget that the increase in the price of oil can boost the rates of these services. As is already happening with some of them. Not surprisingly, traveling from now on will be under a much more expansive monetary plan.
Impact on companies
On the other hand, Spanish businessmen and in general all Europeans, who export their products abroad will benefit, since they will be able to sell cheaper these products, which will automatically make them more attractive in the international market. This effect is immediately transferred to a greater appreciation of its business lines. And that in the specific case of listed companies will be reflected with an improvement in their positioning or what is the same, the price of their shares will rise. Something that small and medium investors who open positions in some of these stock market proposals can take advantage of.
From this scenario, the market can generate authentic business opportunities where you can get large capital gains in all your operations on the stock market. While on the contrary, you also lose a lot of money if you do not choose the best of the proposals that are available in the equity market. Beyond other technical and maybe even fundamental considerations. This is one of the scenarios that can be opened to you now with respect to what you should do with your investments.
Investment in US dollars
More incentives to save in dollars? Well, in effect, it can be another of the approaches to which this scenario that opens up in the currency market at this time can be directed. Of course, you cannot forget that there are hundreds of thousands of small and medium investors who have at least part of their savings in dollars. They do it from the different financial products that banks have designed. From the purchase and sale of shares on the stock market to Investment funds or even the most aggressive derivatives.
Not surprisingly, this is the classic strategy of buying a few dollars in cash "to put under the mattress." It is a measure that aims protect you from unwanted movements. Intended for a very defined investor profile and is that of a flexible person who knows how to adapt to the new scenarios that have caused the movements in the US dollar.
On the other hand, everything depends on a myriad of factors, such as whether there are other investment alternatives, the tax regulations of the specific country, and the preferences against the risk that some alternative investment implies. Something that will not always be easy or simple and that can create more than one displeasure from this precise moment. In any case, the strength of this currency is a new scenario that you must consider for investment from now on. Do not forget it to obtain the maximum returns.