Whether you’re working in finance and FinTech or just a casual observer, it’s difficult to deny that 2018 has been a tumultuous year for global currency exchanges. While the dollar has had an unpredictably robust rise, previously stable currencies such as the Indian Rupee, South African Rand and Russian Rouble have fluctuated so much that it has been impossible for all but the most committed observer to keep track.
On top of this, we’ve seen some highly dramatic nosedives from major currencies as they struggle to adapt to wider economic disruptions, such as the recent collapse of the Turkish Lira and the seemingly unstoppable fall of the Iranian Rial over the course of the year. All of this indicates that it may be just as difficult to see where 2019 takes us. A currency’s performance is an indicator of the economic health of nations, and of the global economy as a whole, so trying to anticipate the next fluctuation is always a useful exercise. Although it may be impossible to predict how next year will go, here are some currencies that are definitely worth keeping an eye on in 2019.
Chinese Yuan (CNY)
The Chinese Yuan has been seen as something of a sure thing in recent years. Whether you’re an investor or involved in fx trading, the ripples beneath the surface of the Chinese economy will not have gone unnoticed. Growth has slowed considerably as labour costs in China continue to rise, and central government responses have helped prompt a gradual currency slide. With an increasingly tense political situation and FDI into China drying up, pundits are predicting a run on the Yuan in 2019, which could have massive implications for just about every other currency too. Stay tuned.
British Pound (GBP)
Few people are unaware of the dismal fortunes of the UK’s currency over the past two years. The Brexit vote in June 2016 quickly prompted a 20% decline in value against the pound, putting the currency at a 31-year low. It has since stabilised and even begun to increase in value again, thanks largely to the highly stable political system and the easing efforts of the Bank of England, as well as a surprisingly strong economy. However, Brexit is due to happen in March 2019, and the Pound’s fortunes depend entirely on the outcome of negotiations. Whatever happens, unless Brexit is somehow cancelled, a further drop in the Pound against the Euro and Dollar is pretty much guaranteed.
Brazilian Real (BRL)
Brazil’s ailing currency could be the real outlier here. Although the country is just clawing itself out of the worst recession in a century, 2019 could be a banner year for the Real. This all largely depends on how the upcoming general election plays out, as well as whether the ongoing corruption trials have an impact on investment flows and the country’s reputation. If all goes well, expect to see a significant jump in the value of the Real against the dollar.
Currency values affect everything, from the cost of your grocery shopping to the cost of your vacation, and keeping an eye on foreign exchange rates is always a good way to get an advanced insight on developing economic and political trends.