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US
Dollar
In contrast to some belief the US dollar
(USD, greenback) remains the currency benchmark as it is still
the largest economy in the world and that most commodities
like oil are still quoted using US dollars. In addition the US
dollar is the currency choice for about 60% of world reserves
to back their own currency. Also, 80% of all transactions in
the FOREX market are in USD.
By far the largest economy in the
world (GDP= $14.2 trillion) proof of this is its enormous
energy consumption requirements with its intake in excess of
100 quadrillion BTU per year. Needless to say the
US love for energy
makes the USD the main currency in which it is traded. The
main exports of the US include industrial supplies,
production machinery and non-auto consumer goods to
Canada,
Mexico,
China,
Japan,
Germany,
and United
Kingdom.
A long standing reputation for
strength and stability has lead the USD to be the backing
currency for 60% of the worlds currencies. To add to this the
US
free market
approach has formed some of the worlds richest companies and
dominant market for trade.
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Euro
Dollar
The rising power of the Euro is due to the
1999 agreement to join 15 countries and form the European
Union (EU). 12 of these countries adopted the Euro
dollar (EUR, euro) to use as their currency.
The EU formed in 1999 and represents as a
unified entity consisting of 27 member states. Part of the EU
is a three stage European Monetary Union (EMU) where 16 of the
members have adopted a single currency, the Euro Dollar. The
UK, Demark
and Sweden not accepted
the third stage and have chosen to continue to use their own
currency. Governed by strong fiscal policy, the Growth and
Stability Pact, supports coordinated economic policy by
applies rules to the eurozone. For example, it stipulates that
members cannot exceed 3% of GDP and public debt cannot exceed
60% of GDP. The economic benefits comprise of joined economies
that offer a variety of European companies that are ranked
among the world's largest in terms of turnover, profit and
market share (Allianz,
Airbus,
Air France-KLM,
Amorim,
ArcelorMittal,
Groupe Danone, Anheuser-Busch, InBev, L'Oral Group, LVMH, Nokia
Corporation,
Royal Dutch Shell, Stora Enso, HSBC and Grupo
Santander). Tourism and agriculture are also strengths of the
EU.
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Japanese Yen
The
Japanese Yen (JPY, yen) has a strong export economy and is
dependent on foreign energy as the country does not have
natural resource of its own. The price of oil can have
influence on this currency.
The second largest economy in the
world Japan has a GDP of
US$4.5 trillion. Manufacturing being its main industrys (motor
vehicles, industrial and transportation equipment,
electronics, chemicals, steel, machine tools, processed foods,
nonferrous metals) Japans largest exporters include U.S.,
China, South Korea, Taiwan and Hong Kong. Being a resource
poor country it imports its raw materials and energy from
China,
U.S.,
Saudi
Arabia, UAE, Australia, South
Korea and
Indonesia.
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Pound
Sterling
The Pound Sterling (GBP, sterling) even
though it is part of the European Union it is not part of the
European Monetary Union (EMU). Remaining alone the Sterling
boasts a reputation for sound monetary policy.
United Kingdom holds 6th place for GDP and
is a major developed capitalist economy. Known as a major
financial center the UK economy supports
a hub of international business and commerce. 81% of the
UK
work force is
based in services. However a highly specialized manufacturing
environment also exists (machine tools, industrial equipment,
scientific equipment, shipbuilding, aircraft, motor vehicles
and parts, electronic machinery and computers) exported mainly
to US, Germany
, France,
Ireland
and
Netherlands. |
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Swiss
Franc
The Swiss Franc (CHF, swissie) is known for
its strong and undisclosed banking system. Also their policy
on neutrality in times of war makes it a safe haven
currency.
The countries strong monetary
policy and banking system have made it a safe haven for
investors. This economy is dependent on foreign currencies
with the transfer of capital through its banking system.
Switzerland, a pint
sized country, has a contrasting high level of specialized
labour. Trade and industry (machinery, chemicals, watches,
textiles and precision instruments) are fundamental strengths
of the economy. Low unemployment and inflation give the
country a good footing in the competitive world economy.
Exports stands at 56% of GDP with main trade partners
Germany,
US, Italy,
France, UK,
Spain,
Netherlands. |
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Australian
Dollar
The Aussie is heavily dependent on the
price of gold as it is the third largest producer of this
precious metal. Also Australia has some of the world highest
interest rates making it attractive for speculator to profit
from the high yields it offers.
Mining and Agriculture make up 57%
of exports however is only constitutes 7% of
Australias GDP.
Australias
terms of trade are characterized by commodity exports which
include coal, gold (3rd largest in the world),
meat, wool, alumina, iron ore, wheat, and machinery and
transport equipment and are predominantly shipped to
Japan,
China,
India,
South
Korea, US and New Zealand.
Strong interest rates also lure overseas
speculators searching for high yields in cash and bond
investments strengthening the Aussie
dollar. |
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New Zealand
Dollar
The Kiwi is similarly dependent on
commodity prices with commodities representing over 40% of the
countrys exports. |
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Canadian
Dollar
The Loonie is also dependant on commodity
prices as it is the 5th largest producer of gold and the 14th
largest producer of oil which is mostly exported to the US. It
also has 80% of its exports to the US therefore is heavily
influenced by activities in the US. |
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