Understanding International Finance
The Foreign Currency Exchange rate (also known as the CFEX) is the standard reference in the trade of foreign currencies. The rates quoted by this service are based on a number of international market factors such as current exchange rates, economic policies and news from around the globe. There are also economic, political, and structural factors such as demographics and international trade that can affect currency rates. The Swiss Franc is the most widely traded currency in the world. The U.S. Dollar and Swiss Franc are the currency pairs used in the CHF. The currency rate between these two pairs is usually the main determinant for trading Forex.
o The Swiss Franc and the US Dollar. The Swiss Franc moves very slowly compared to the US Dollar. Although there have been cases when the CHF was able to gain or lose value against the US Dollar, the majority of the time it stays relatively constant. In some economic or stock market scenarios, the Swiss Franc may move against the US Dollar but this does not happen frequently.
o The Swiss Franc and the Euro. This type of currency pair is more commonly known as the EUR/USD currency pair. It is the most widely traded currency pair in the world, making up almost 80% of the total CHF that is traded on the Forex market.
o The US Dollar and the Swiss Franc. The Swiss Dollar is the most popularly traded currency in Switzerland. The US Dollar is the second most popularly traded currency in Switzerland. Both of these currency pairs make up nearly half of the CHF that is traded on the Forex market. If you are considering investing in Forex or trying to determine which currency pairs are the best to buy one USD for another, you may want to research the Swiss Franc first.
o The Swiss Franc and the British Pound. Also known as the GERF or the euro, the Swiss Franc is the fifth largest financial currency in the world. The British Pound is the currency of Great Britain and the Euro is the currency of Italy. When used in the Forex market, the Swiss Franc will have a maximum exchange rate with the British Pound. Because of this, many countries use the CHF to determine their exchange rates. When purchasing CHF to sell to make a profit in the currency market, you will want to purchase at the correct rate to obtain the largest return.
o The Swiss Franc and the Canadian Dollar. Known as the CHFx and the CDM, respectively, the Swiss Franc is often used as the currency of choice in Canada. Many Canadian companies base their international transactions on the values of the Canadian Dollar and the Swiss Franc, making it an excellent way to purchase products for resale.
o The Swiss Franc and the Euro. Another common currency pair in Europe, the Swiss Franc trades regularly with the Euro. The Euro is commonly purchased by many European Union nations and other international organizations for the storage of their money and other assets, although the Swiss Franc is often used as the payment currency for the purchases of goods and services by EU citizens.
If you would like to know more about the global economy and the political environment of the United States, you will find that you are in good company. Almost all nations in the world operate with currencies different from the United States dollar. In fact, over ninety percent of all foreign investments are conducted in currencies other than the U.S. Dollar. For this reason, it is important to learn about foreign investment and currency trading before making an investment decision. By learning about how the currency market works around the world, you will be able to better understand the political environment of each nation and the political influences that are exercised upon the value of the currency in that nation. Although it may seem difficult to learn about international finance, it is very important to do so if you would like to make informed decisions about your investments regarding the currencies of various countries.