Which Countries Are in Danger in 2020?
Crises weaken the weak more than the strong. That can be seen in the foreign exchange market. Some currencies have lost 25 percent of their value in 2020 against the U.S. dollar this year. (Like the Namibian Dollar, South African Rand, Brazilian Real.) Currencies in other larger countries, such as Mexico, Russia, Indonesia, Turkey, or Australia, also showed double-digit weakening percentages. This can affect many hundreds of millions of people. The US dollar, meanwhile, strengthened only moderately against major currencies. (The DX dollar index rose 4.5 percent this year.)
Which currencies are most affected by the phenomenon of devaluation in 2020? Primarily those that derive most of their revenue from oil or other raw materials. Such as South Africa, Brazil, Russia, Norway, or Canada. Other countries may have been on the list because they used to make a living from tourism. Or they are small and very vulnerable to international trade. Such can be Iceland, Thailand, New Zealand, Hungary. Others, because they are indebted in foreign currency. Like Turkey or Ukraine.
There are many other factors. For example, possible strength or overvaluation of a particular currency before the crisis. Or the real interest rate, the inflation in that country. This year, by the way, precious metals, especially gold, have kept their value measured in the US dollar. (Also read: Are We Facing Epic Inflation, Horrific Real Interest, and Brutal Gold Price Explosion?)
7 + 1 Impact That Could Affect Billions
What could be the impact of these processes on small investors, average people, businesses in the countries concerned? What causes the devaluation of currencies in 2020?
The Cure for Currency Devaluation?
Is there a cure for currency devaluation? How to protect against all this? This varies from country to country. Perhaps the best advice is not to put all your eggs in one basket. Divide your money between domestic and foreign assets, interest-bearing investments and stocks, precious metals, and real estate. We know many people work where they can. They have no choice. But whoever can do it, should choose a job that is not dependent on the crisis. For example, in a stable sector, in a strong company. Don’t keep money in an investment that doesn’t offer a positive real interest rate. Currency devaluation and inflation go hand in hand. (Also read the following post: Eight Ways How Inflation Threatens Your Income and 13 Ways to Fight It)