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Why Is the US Dollar a Safe Haven Currency?

   • Why Is the US Dollar a Safe Haven Currency?   http://www.forexconspiracyreport.com/... Why Is the US Dollar a Safe Haven Currency? In times of economic distress and especially in times of outright financial panic, investors look to safe havens for their money. The safe haven may be a type of investment, holding cash or buying gold. When the investor chooses to hold cash the question is which currency? A safe haven currency such as the Swiss franc, Japanese yen or US dollar is commonly the choice of international investors who distrust their own nation’s currency. In this regard is there an exact definition of a safe haven currency and why is the US dollar a safe haven currency? Safe Haven Currency The Forex Dictionary defines and explains safe haven currency. A safe haven currency is a currency that investors and traders believe is stable enough to keep its value compared to other currencies in times of economic uncertainty, inflation and other forms of crisis. Generally, safe haven currencies are from countries that have very stable economies, so the currency does not change much in value. In times of crisis, wealthy investors may seek to diversify their cash holdings away from their home county's currency to reduce the risk of losing wealth through depreciation in the currency. By storing their wealth in safe haven currencies, an investor can cut down the risk of any single country seeing its currency sharply revalued. At the same time, traders try to read the moves in to and out of safe haven currencies in order to take up positions that profit from the buying and selling pressures these currency moves create. Although the label of safe haven doesn't always apply, the U.S. dollar (USD), Japanese yen (JPY) and Swiss franc (CHF) are often considered to be safe haven currencies. At the current time does the USD fit the definition of a safe haven currency? Why Is the US Dollar a Safe Haven Currency? There are times when financial and economic chaos are spread worldwide and the safe haven currencies are simply those who are in the least trouble. That may well be the issue today. Japan is in and out of recession. The EU is flirting with deflation. China is seeing the end of its miraculous economic rise and the USA is slowly but surely recovering from the Great Recession. Unemployment in the USA is at historic lows and the Federal Reserve is considering raising interest rates again to stave off inflation. The dollar has corrected from its two year rise but considering that the US economy is doing the best of all major economies the US dollar is the safe currency at the current time. According to Reuters the U.S. economic outlook is looking up. The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained strength in the labor market despite a sharp slowdown in hiring last month. Other data on Thursday showed wholesale inventories recording their biggest increase in 10 months in April, prompting economists to raise their second-quarter economic growth estimates. The rise in inventories came even as sales at wholesalers rose for a second straight month. Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 264,000 for the week ended June 4, the Labor Department said. The drop confounded economists' expectations for an increase to 270,000. While unemployment is still a problem in Europe and a growing issue in China the USA is essentially at full employment. That is part of why the US dollar is a safe haven currency.