Localfund.com - All about Fund and Investment
*Home>>>Foreign Investment

Is it a good investment to invest into foreign currency?


I have a friend who is investing heavily into the new Iraqi currency. He claims that right now its worth next to nothing but in a short time when the new currency hits the world markets it will sky rocket in value. Hmmm, Is that a good investment to make?

Investing in a new currency is like investing in a new stock. Prices depend on demand and supply. But in the currency market, additional complication develops due to internationally relative factors such as inflation rates and policies that might affect export-import activities.

In the short run, I dare say that if the new currency is used for purchasing iraqi products, and if the demand for iraqi products is high, there will be huge demand for the new currency, and of course it will sky rocket in value.

However, I expect that other currencies will be in use concurrently (in practice) for some time, like in the Euro case (so, even if you gain, it would not be that much - think about this: if all contracts are priced in USD, there would be no needs to buy the Iraqi currency). Are you willing to take risks of self-adjusting machanism of the currency market?

There is nothing risk-free in the investment world, and remember the classic words: high risk, high return.

Hi there, I am a Finance guy.
Usually the answer with the investments advice is "depends", but in this case I can make an exemption and say "no".
The above mentioned scenario is valid only when the foreign currency is a hard currency, meaning that it can be traded freely on various markets. Most of the currencies can be used only in their origin countries (e.g. the Iraq currency does not have value outside Iraq and noone will buy it or sell it in the US or in any other country, except for the private persons which do it by themselves). Therefore it is a high possibility to get stuck with a high amount of foreign currency which you can spend only in... Iraq.

On the other hand (although the above should be enough), in a "market" such as the Iraq one noone can really predict what is it going to happend with the economy or (even more) with the local currency.

So forget about it...

Hope it helps.

Tags
  Fund Performance   Fund Manager   Fund Management   Forex   Foreign Investment   Financial Investment   Fidelity Investment   Fidelity Fund
Related information
  • How to improve the saudi stock market in order to improve the foreign and arab investment?

    The Saudi Stock Market needs to expand and include more companies that can be traded there. When there are too few companies and many investors with lots of money. Then stock valuations becom...

  • Buying foreign currency as an investment?

    My opinion is that if you're going to buy non-US currency as an investment, the time to do it is when the dollar is at or near highs. That way you gain when the other currency increases in va...

  • How does Foreign investments helps Indian economy?

    foreign investments helps Indian economy. when an Indian company gets huge foreign investment they can utilized that money in such a way that they can get the maximum of it .when a company has huge...

  • New foreign products of textile,soap,footwear,cosmetic... etc.to market in India with low investment?

    Is this a question?

    ...
  • I need some advice on foreign currency,namely iraqi dinars,think it's a good investment?

    It is a good investment for whomever sells them to you!

    ...
  • What is the best strategy to use in the Foreign Currency market with less than $500 dollars of investment Cap

    There are countless strategies out there and many of them work. Put your $500 away for the moment, and do some reading up (the internet has tons of information). Then sign up for a dummy forex trad...

  • Are Eurpoeans missing an investment opportunity?

    The dollar is speculated to fall even lower. Maybe that's the opportunity Europeans are waiting for.

    ...
  • Foreign investments...ETF question?

    The value of an ETF goes up or down depends on the stocks which make up the ETF. Most ETF's are comprised of stocks sold on the US markets (NYSE, AMEX, NASDAQ) a break down of stocks held by t...

  •  

    Categories--Copyright/IP Policy--Contact Webmaster