Dateline: Taipei, Taiwan
I joined with a sea of other revelers last night to usher in the New Year under the city’s iconic Taipei 101 tower, the world’s second tallest building.
I’ve always been a huge fan of skyscrapers, but Taipei 101 seems a bit lacking in grandeur to me. Nevertheless, Taipei is an enjoyable city with plenty of history and an interesting blend of Chinese culture.
Around the world, countries are ringing in the New Year with more than just fireworks. In Europe, Latvia has finally adopted the eurozone currency and dismissed the Latvian lat. Of course, Latvia has been increasing its position as an offshore banking hub for Russia and eastern Europe ever since fault lines began to develop in Cyprus in 2012.
Yesterday, I shared two longer-term currency positions I’m taking more seriously as I further de-emphasize my reliance on anything denominated in western currencies.
My interest in the Chinese renmibi and Hong Kong dollar are what I believe are sane strategies to somewhat “set and forget” as a way to decrease your dollar influence.
But with the Fed closing off a tiny part of its money spigot, all of the so-called gurus are proclaiming that 2014 will be the year of the US dollar. To a certain extent, unfortunately, I believe they’ll be right. Experts are already calling for a 15-20% decline in US markets as the supply of free money to drive up prices slows, even if only a little.
However, while the goose steppers will follow the dollar-centric line of thinking, I believe there will be other currency trends worth watching in 2014.
Keep in mind that I’m not a financial analyst, broker, or investment advisor. I merely study trends around the world and make observations. And my bias is against the “rah rah, America” propaganda that has allowed the cartel there to manipulate the dollar.
So, please, do your own due diligence on any currency before you take action. What you do with your money is your business and your responsibility.
Funny money trend: the Indonesia rupiah
I wrote in November about just how badly Indonesia has managed its monetary policy. The government has done as good a job with its Indonesian rupiah as the city of Jakarta has done managing its horrific traffic flows.
With political change coming in Indonesia later this year, it will be an interesting situation to watch. Despite my affinity for investing in Southeast Asia, I’m not holding my breath.
While there is a decent chance for reform in Indonesia, things will take time. Your currency doesn’t lose twenty percent of its value practically overnight due to small issues.
Commodities: Austrian dollar and New Zealand dollar
Imagine a country raising interest rates. In this day and age, it seems like some far-fetched alien land. That is just what New Zealand will be doing. Strong economy growth there is causing many to call for a strong year for the New Zealand dollar. “Soft commodities” the country is known for exporting will help drive continued growth.
That’s because Chinese families who don’t trust local food products will continue gobbling up imports such as New Zealand dairy products. Easing in the One Child policy will only contribute to stronger demand for developed world products, and New Zealand will benefit.
While the world is busy writing off the Australian dollar, I do see potential for it once a lower resistance level is met. Consensus from analysts seem to think the Australian dollar is 80 cents against the US dollar, but since the central bank is the one propping up that position, I tend to agree more that the Aussie dollar could fall further.
At least Australia is willing to churn out its commodities, a position The Land of the Free doesn’t find itself in. Unfortunately, I see Australia as the next country to join the ranks of the USSA and the UK in becoming a statist paradise. It’s not that far away.
Deficit hawk trend: Korean won
One analyst wonders if the South Korean won is a new “safe haven” currency. Certainly, while most are calling for a strong 2014 for the US dollar, currencies of countries with strong balance sheets look well positioned in 2014.
Now that the Swiss franc has torched its reputation, traders are looking elsewhere.
Korea has actually cut its foreign debt by almost half in recent years. Other Asian countries like Malaysia have improved their fiscal house, even if it’s not the way I’d like. In addition to being the hub of much of the world’s organic growth, Asian currencies have underperformed in 2013 and I’ll be watching for a few surprises against the dollar.
It’s nice to see that there is some sanity left when it comes to countries with stronger fiscal conditions being expected to do well. Growth and currency appreciation in the US are a set of smoke and mirrors that other non-bully nations can’t as easily replicate.
Of course, places like India look like a complete mess right now. In all honesty, I don’t think India gets the whacking it deserves in the press. The gold grabbers in Vietnam only WISH they could do what the Indian government has done, any no one is suggesting stockpiling Vietnam dong.
The troubles in India go to show that western viewpoints aren’t always the best for maintaining economic growth. While I don’t favor the more authoritarian aspects of the Chinese government, I don’t think the situation there is any worse than the political situation in the US.
Because China is able to grow its economy without having to promise its lower class and rural poor free stuff every time an election rolls around.
India can’t do that. For that matter, neither can the United States. And it’s killing them.
Speaking of a new safe haven currency, it has been suggested that the British pound is one currency to add to that list.
Based on the idea that the British economy is growing again, some traders have suggested it will approach 2008-level values against the dollar in the US, where greater political uncertainty is still an issue.
Personally, I’d rather put my money into a place that’s growing, not a soft totalitarian state that peaked in 1900. I’m happy to visit, but not if the currency gets out of hand.
On the same note, my past consideration of the Turkish lira has been dampened seeing that the Turkish government will likely play the same “go along to get along” game until their elections in 2015 in order to hold onto power. Things will not play out well there.
Nomad Capitalist is all about helping people like you “go where you’re treated best”. If you want to learn more about what exactly that means, and why I believe so strongly in it, I made this video that is worth watching: