Saturday, 14 January 2012

Top Three Performers of 2012

From my research I have noticed a trend in the predictions of economists and investors, although many have differing views most can agree that there are a specific three currencies which will perform well this year. Economists don't claim to be fortune tellers, in fact they often change there minds about what will perform well. The profitability of a currency relies on so many outside factors that it can change in an instant. These few currencies though, at this stage appear to be the most likely to perform stably.
These currencies are The Chilean Paseo, the South Korean Peso and the Canadian Dollar.

Firstly the Chilean Paseo
It can be argued that Chile is the best run country in South America. It has a stable government with elections not due until the year 2013. It is in the midst of a resource  boom and is profiting highly from the rising prices and it is a little known fact that Chile has a Transparency International Corruption Perception Index (Which is a rating given by the Transparency International coalition) better than the one the USA currently holds. In 2011 the Paseo lost approximately 8% due to fears of emerging markets but it only have a deficit of 1%. With a stable banking sector and incredibly little government debt Chile is in a an excellent position to cushion any blows it might sustain, for example from natural disasters (like the earthquake in 2011)
Due to these reasons the Paseo is in one of the best positions of all world currencies to gain value in this year.

The South Korean Won
The Won is generally unfazed by the problems of the United States as well as a collapse in the commodity prices. Since 2007 The Won has lost approximately 20% against the green back but flat lined in 2011. Korea holds an enormous budget surplus with government debt practical nonexistent. Elections are scheduled for this year however, both the government and opposition are highly pro market so any outcome should not effect the market.
There are risks though. The most worrying of these is the new leader of North Korea. It is unsure times and the risk of attack is unknown.
Generally though the South Korean Won should be a good investment. Just watch the tensions over the border!
The Canadian Dollar
The Canadian Dollar is possibly the surest bet this year. 
Canada is the closets neighbour the the United States, however, unlike many people think it is a strong economy of its own distinguished from America. Canada has a great banking system as well as enormous amounts of mineral and energy wealth. Its budget deficit is much smaller than many other countries as well. The Dollar rose to a record height of $1.06 American in early 2011 but by the end of the year dropped back to around 0.98. This demonstrates that it has the potential to rise and given its good economic climate is most likely.