The main currencies and their aspects – important lesson
The American dollar is main world currency. All other currencies usually rate toward the dollar. In conditions of international economical and political instability the American dollar is the main currency which is provided by the time of the South Asian crisis in 1997-1998.
The American dollar becomes leading currency in the end of the World War II in correspondence with Breton-Woods agreements with which is defined that all other currencies are valued in dollar equivalent. Adding in appeal of the Euro in 1999 in small steps lowed down the part of the dollar.
The main currencies which are traded for dollars are Euro, Japanese yen, British pound and Swiss Franc.
The Euro is planed as leading currency in creating of exchange rates of the type of the American. Like the American dollar the Euro is an international currency secured by the members of the European currency union. This currency get under the influence of the unsteady development of these countries the high levels of unemployment in some of them and the reject of some governments to accomplish structural reforms. In 1999 and 2000 the rate Euro – dollar is changing because of the low tide of international investors in particular Japanese forced to liquidate the unprofitable gird on Euro accounts. Except this European financers reconsider their own wallets in direction lowing down the influence of the Euro which is connected with the lowed wish for minimizing of the risk on the currency deals.
To the end of the World War II the British pound is main world currency. Its nickname “cable” is connected to the usage of apparatus for commerce on the market during the bloom of the pound. This currency is traded in big capacities for dollars and yens but it’s auctions for other currencies are different from each other. The two-year-participation in the European exchange system (EES) in the period between 1990 and 1992 shows the beneficially influence on the British pound as long as it is made as an obligation to subject of the hesitation of the German mark but the crisis conditions accelerated the leaving of the EES effected psychological.
To bring in appeal of the Euro the pound drags out advantages of all kinds of rumors for bringing closer the courses. With the appearance of the Euro the English bank is trying to equalize the highest levels of the rate of the pound with the lowest boundaries of the rates of the Euro zone. In the beginning of 2000 the pound had chance to join to the Euro if the results of the referendum in Great Britain had turned positive.
Japanese yen is on third place among the most popular currencies on the world market in spite of its capacity of presence on the market is lower than the American dollar and the Euro. The yen distinguish with high almost twenty-four-hour liquid all over the world. The biggest demand of yen for currency deals is among the Japanese “keirecu” – economical unions.
The yen is really sensible to the hesitations of the index of Nikkei, the Japanese stock market and the market of the immovable properties. The attempt of the Japanese bank to low down the inflational accumulation from the last two sessions has shown negative influence on the rate of the yen in spite of that the influence was short-termed.
The Swiss franc is a currency of the only one of the leading European countries which is not participating neither in the European currency union neither in the number of the countries of G-7. In spite of that the capacity of the Swiss economic is relatively not big the franc refers to the four main currencies reflecting the power and the quality of the financial system of Switzerland. Switzerland is in tight economical connections with Germany and with the euro zone. That’s why in conditions of political insecure in East the Swiss franc is preferred than the Euro.
The Swiss franc is stable currency. From point of view of the currency commerce the franc repeats the way of the Euro but the franc is not as liquid as the Euro. Exceeding the demand over the supply the Swiss franc may be more волатитен than the Euro.
The sterile intervention is neutral from point of view of it’s influence on the profits. As long as few central banks would like their interventions on the currency markets to influence on the whole economics the sterile intervention is preferable. The same is considered for the federal system of the reserve. The sterile intervention includes an extra measure in the frames of the currency deal. This measure is concluded in the sale of state securities compensating the increase of the reserves because of the intervention. This can be understood easier if we imagine that the central bank wants to finance a currency deal at the expense of the sale state securities. As long as the sterile intervention influence only on the level of the demand and the supply of separate currency its effect is short-termed.