Tag Archives: Currency

The forex market continues to make some folks nervous. While there are certainly reasons to be cautious when playing exchange rates, a considerable amount of the nervousness of the average person on the street comes from misinformation. Most notably, they all too often think of the forex market as being highly volatile. I addressed this issue before in Looking at Volatility Across Markets, but I think it’s worth revisiting.

I’ve collected 5 years of weekly values for a number of markets to look at just how volatile they are. Let me first look at the US Dollar Index. Between July 2007 and July 2012 the average weekly range for the USD Index was just 2%. I derived that by taking the distance between each week’s high and low and dividing it by the midpoint for that week [( High – Low)/( (High+Low)/2) ]. At the same time, the standard deviation of weekly closing prices (which gives us an idea of how choppy the market is) was only 4.9% (relative to the average close for the study period).

As you will see, that’s not a lot of volatility.

Let’s start by comparing the USD Index values to those from the major US stock indices.

DJIA: 4.0% average weekly range, 15.0% standard deviation
S&P 500: 4.4% average weekly range, 16.0% standard deviation
NASDAQ 100: 4.7% average weekly range, 20.2% standard deviation
Russell 2000: 5.6% average weekly range, 17.3% standard deviation

As you can see, the major stock indices show considerably more volatility than does the USD Index.

How about individual stocks?

JPM: 9.4% average weekly range, 15.0% standard deviation
IBM: 4.8% average weekly range, 24.6% standard deviation
GE: 7.4% average weekly range, 39.9% standard deviation
XOM: 5.1% average weekly range, 12.0% standard deviation
KO: 4.0% average weekly range, 15.3% standard deviation
AAPL: 7.2% average weekly range, 53.5% standard deviation
KO: 6.2% average weekly range, 18.0% standard deviation

No real surprise to see that individual stocks are pretty volatile by comparison.

Looking at commodities:

CRB Index: 3.9% average weekly range, 18.2% standard deviation
Gold: 4.6% average weekly range, 28.1% standard deviation
Crude Oil: 8.4% average weekly range, 24.2% standard deviation

Here again we see markets with a great deal more volatility than the USD Index. The one place where there is something of a contest is the bond market. The long-date Treasury note/bond ETF is TLT. Looking at its weekly figures I come up with a 3.2% average range and 10.6% standard deviation. That’s considerably less volatility than the other markets and securities shown above, but still not at low as what we have seen the last five years in the USD Index. We would likely have to move down to short-term Treasury securities (like 2yr Notes and T-Bills) to find lower values.

The point of all this is that anyone avoiding the currency market because of the perception that it’s super volatile is operating on a false belief. The figures just don’t back that up.

 

For a long time there’s been an argument in the retail foreign exchange trading community about whether it is better to trade futures or spot. It’s something which comes up so often that I included “Is it better to trade spot forex or currency futures?” as one of the questions addressed by contributors to my Trading FAQs book. One of the key elements long seen as being in favor of futures is the regulation, transparency, and security of the futures market.

Then we had MF Global go under.

In one shocking moment the accounts of thousands of futures traders were at best frozen and at worst completely gone. This was a stunning development. After all, customer funds with brokers are supposed to be sacrosanct. Even if a broker goes belly-up it’s not supposed to impact customer accounts. The MF Global fiasco shook that confidence in the system very hard.

Now we get PFG Best.

No doubt it will take a while to get things all cleared up, but early indications are that a lot of customer money has vanished. This is another blow to the previously nearly unassailable integrity and stability of the futures markets and brokerage industry.

I am personally on record as having favored spot trading over futures for some time now,  primarily on the basis of flexibility and lower capital requirements. Those on my side of the debate may very well use the MF Global and PFG collapses as arguments in favor of the spot market, especially since none of the big brokers in the retail forex space have suffered anything like this kind of failure (though they have had issues of their own). This, to my mind, is a dangerous case to make.

What the implosion of these two futures brokers does is highlight the need to manage risk not just on the level of your trades and/or portfolio, but also in the security of your accounts. We may feel comfortable working with highly capitalized firms, but as MF and PFG have shown, there are flaws in the regulatory and oversight structure.

And on top of all that, whenever things aren’t going well in society there is an increased effort to find someone to blame (notice how few market scandals there are during bull markets?) and to look for lawbreaking behavior. The banks and other financial institutions are facing that now from many different angles, as the current LIBOR scandal demonstrates. What impact would there be on your broker or bank if a regulator or court slapped it with a huge fine or judgement?

The point is that diversification of assets isn’t the only thing you want to be doing. You should be diversifying your exposure to financial institutions as well.

I’ve got a pair of graphics that I think tell and interesting story. They look at a pair of currencies which fall into the commodity category in that they tend to be highly correlated to changes in the price of things like oil, gold, etc. The first graphic shows USD/MXN with oil (front month futures), the correlation between those two markets, the S&P 500, and that index’s correlation to USD/MXN.

Mexico is an oil producer, so the peso often sees its value impacted by changes in the price of that commodity. As you will notice in the chart above, though, the correlation between USD/MXN and oil prices, as indicated by the red line in the middle of the chart, has been up and down on both sides of the zero line (Note: When the line is positive, the MXN is actually negatively correlated to oil).  By contrast, the correlation between USD/MXN and the S&P 500 (bottom line) has been strongly positive for most of the last 12 months (on a trailing 20-day basis).

Notice below that we can see a similar type of pattern in AUD/USD relative to those two markets.

 

Now, it should be noted that the S&P 500 and oil tend to be positively correlated, but it’s a choppy thing. The relationship often breaks apart and sometimes even goes negative. This is a function of the factors which influence oil prices (such as geopolitics and supply/demand considerations) which may not be as significant a factor in stock prices. Equities are perhaps better indicative of general economic conditions, especially on a forward looking basis.

So what does this all mean? It’s telling us that the so-called commodity currencies are more sensitive right now to general economic conditions than to commodity prices. In the case of the peso, we often see it responding to conditions in the US as better economic prospects north of the boarder means more exports. In the case of the Aussie, there is more of a Chinese linkage, but also a carry trade factor. With the higher Australian interest rates, that’s a favorite for longs against the likes of the yen when the markets are feeling positive.

With these things in mind, it is worth watching how these currencies perform as they can sometimes tip off underlying strength or weakness in the global markets. That has actually been the case of late in the way commodity currencies did not dip as much as they may have been expected – or in the case of the MXN, rallied very strongly. Something to keep an eye on.

 

The global economy began to stabilize following the most severe downturn since the 1930s during the summer of 2009.  The recovery that subsequently materialized outpaced the previous post-1945 recessions of 1975, 1982, and 1991, as relatively lackluster growth in real income-per-capita in developed economies was more than offset by a robust rebound in economic activity across the emerging world.

Three years on, the world’s largest advanced economies continue to struggle, and require ultra-accommodative monetary policies simply to prevent the already sizable output gap from widening further.  Despite the ongoing life support, recent data indicates that activity across virtually the entire developed world has down-shifted close to ‘stall speed.’

Equally troubling, if not more so, is the observation that unlike previous ‘growth scares,’ the emerging world’s primary growth engines have struck a ‘speed bump,’ with a pronounced slowdown in economic activity evident in Brazil, China, and India.  All told, roughly two-thirds of the global economy is slowing, stagnating, or contracting.

Against this disquieting background, it is hardly a surprise that the voracious appetite for risk assets apparent earlier in the year, has all but disappeared.  Indeed, investors’ increasing emphasis on wealth preservation over capital gains has seen global equity indices slip into negative territory year-on-year, and lose virtually the entire advance in prices recorded during the first quarter of the current calendar year.

Few risk assets have escaped investors’ desire for safety, and the unsettling global outlook has precipitated a particularly pronounced decline in commodity prices.  The Thomson Reuters/Jefferies CRB Commodity Index has plunged more than 15 per cent since late-February, and is more than 20 per cent below the highs registered last summer.

More trouble could well be in store for risk assets, as investors’ ‘dash from trash’ has pushed yields on both short- and long-term debt securities across ‘safe haven’ sovereign bond markets to levels that are simply not consistent with economic expansion.  Indeed, the message emanating from government debt markets that include Canada, Germany, Japan, the Netherlands, the U.K., and the U.S., is one of mounting financial stress and economic turbulence.

Increased investor concern has pushed rates on short-term sovereign notes deemed default-free to near-zero, while the scramble for ‘safe’ assets has seen the yields available on long-term government bonds plunge to historic lows of well below two per cent.

The yield on ten-year U.S. Treasury bonds for example, dropped to below 1.5 per cent in early-June, while ten-year German Bund yields fell below 1.2 per cent.  Meanwhile, the yield offered on U.K. gilts declined to levels never seen before in a data-set that extends back to the first issue of British government debt in 1694.

What has sparked the recent panic and the purchase of ‘safe haven’ sovereign debt at prices that would appear to promise zero real returns, at best, on both short and long maturities?  The seemingly irrational dash for safety can be partially explained by the fact that the current economic slowdown is detectable almost everywhere and virtually assures a ‘growth’ recession or below-trend growth – if not worse – during the second half of this year and beyond.

The U.S. is currently experiencing the weakest economic recovery in the post-1945 era, with growth averaging just 2.4 per cent over the last eleven quarters, as compared with 4.8 and 5.5 per cent respectively over a comparable length of time following the deep recessions of 1975 and 1982.  Economic growth is running at less than half the pace that is typical for this stage in the cycle, and slowed to below two per cent in the first three months of the year.

The slump in payroll additions to a miserable 73,000 per month average in April and May, alongside weaker capital expenditures and government outlays, suggests that further deceleration took place in the second quarter.  More troubling however, is the fact that tax cuts and spending increases amounting to roughly four per cent of GDP are set to expire simultaneously at the end of 2012, and the uncertainty surrounding the ‘fiscal cliff’ is hurting growth.

Much has already been written on the euro-zone, where the economic performance since the ‘great recession’ struck trails the Japanese experience following the deflation of its twin property and stock market bubbles more than two decades ago.  The periphery is mired in recession, and recent data confirm that the loss of confidence and the resulting adverse impact on economic activity has spread to the core, including Germany.  It is safe to conclude that the euro-zone will not provide a boost to global economic growth anytime soon.

Meanwhile, the malaise apparent in advanced economies has been accompanied by a growth slowdown in Brazil, China, and India.  The Brazilian economy slowed to a virtual standstill during the first quarter, and the pace of expansion in China dipped to the slowest rate in almost three years over the same period, while India’s quarterly growth performance deteriorated to its worst level in seven years. A return to above-trend growth may not arrive as soon as optimists believe given over-investment in China, a tapped-out consumer in Brazil, and a disturbing fiscal deficit in India.

Investors have dashed to safety, as data confirmed weakness in economic activity virtually everywhere.  Investors must appreciate that fiscal and monetary policymakers are short of tools with which to combat the latest weakness.  Caution is warranted.

 

www.charliefell.com

 

 

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/14/12

Rain, rain, go away. While Boston has been under rain showers for the past week, and recovering from the Celtics loss May 14, we drizzled some of the top headlines from the financial markets into this week’s roundup.

In the U.S. the economy continues to show signs of improvement. Jobless claims now stand at 367,000—1,000 less than last week, and job openings in March are the highest in almost four years, as employers advertised 3.74 million job openings. Additionally, economic confidence remains steady at -18, up slightly from the previous week and slightly better than the -20 average for the month of April.

In the eurozone, the German economy grew by 0.5 percent in Q1 2012 after it contracted 0.2 percent in Q4 2011. Economists predicted a growth rate of 0.1 percent, and some experts speculated Germany—the economic backbone of Europe—could help save the eurozone from recession. Macroscopically for the eurozone, economists predicted an economic growth of 1 percent for 2013, with the European Commissioner for Economic and Monetary Affairs Olli Rehn saying “a recovery is in sight” for the area. After Greece entered its second week without a government, the European Commission hoped the country would remain part of the eurozone, not withdrawing from the region and returning to its drachma form of currency.

For hedge funds, they saw an inflows increase of 1.24 percent so far in May, according to the GlobeOp Capital Movement Index.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

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After a very successful webinar with Adantia LLC, we couldn’t wait to invite co-founder Brad Kuhlin to the Currensee office to find out more about their trading strategy. Brad let us in on a few secrets of Adantia’s stop loss strategy, an impressive three-stop system. The first video includes additional information on Adantia’s trading approach and their special stop loss strategy. In the coming weeks, we will add three additional videos to this post. Adantia trades under the ROCED.A ticker and has outstanding risk adjusted returns since becoming a Currensee Trade Leader.

Adantia LLC Interview Introduction from Team Currensee on Vimeo.


Predictions on volatility in 2012:

What forex strategies will prevail in 2012:

Comments on the Euro breaking up:

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

The seemingly endless turmoil in the euro-zone virtually ensured that 2011 would prove to be a difficult twelve months for investors in risk assets.  Indeed, the increased stress evident in the region’s sovereign debt and bank refunding markets in recent months – alongside growing concern that the single currency might unravel – is the primary reason that the developed world’s major stock market indices failed to stage a meaningful recovery off the cyclical bear lows registered in the autumn.

Stock markets climbed higher during the spring and managed to retain their positive momentum in the face of higher oil prices – precipitated by political unrest in the Middle East & North Africa.  However, the heightened appetite for risk struck a speed-bump towards the end of April, as a long string of negative economic surprises in the U.S. – just as the Federal Reserve’s second round of quantitative easing neared an end – caused fears of a double-dip recession in the world’s largest economy to resurface.

Stock prices in the developed world and elsewhere duly registered a bear market decline of more than 20 per cent but, just as investors’ recession fears subsided and the world’s major bourses began to stabilise, attention shifted across the Atlantic to the deteriorating and seemingly hopeless position facing the Greek government, which had seen its economy plunge into a severe downturn on the back of the harsh austerity programme prescribed by the so-called troika.

The Greek crisis and the turmoil precipitated across the euro-zone prompted Europe’s slow-moving leadership into action, who reluctantly announced to the world in September that they had just, “Six weeks to save the euro.”  The disturbing rhetoric was duly followed by the fourteenth summit in less than two years and, the third comprehensive attempt this year alone, to quell the rumbling debt crisis that continues to question the viability of the region’s monetary union.

The proposals agreed to at what was dubbed the, “summit to end all summits” were received enthusiastically by investors at first glance but, upon further reflection, the measures were deemed to fall well short of what was required to draw a line under the crisis.  A wave of selling followed and, the stress that was once confined to the sovereign debt markets of the miscreants in the monetary union’s periphery steadily moved inward to infect the core, and even a supposedly blemish-free Germany did not manage to escape investors’ wrath.

The tension continued to mount and the growing sense of panic among the international community was palpable as the realisation that a disorderly break-up of the single currency could no longer be considered a trivial probability dawned on observers.  Not surprisingly, all eyes were focussed on the latest gathering of the European Union’s political elite in Brussels towards the end of last week.

The latest summit to save the euro appeared not to disappoint and delivered much as expected – with much of the detail well flagged days in advance – and, as a result the financial markets’ initial response was relatively mute but, two days of analysis over the weekend and investors delivered a more considered verdict – the summit had failed to move the euro-zone even one step closer to a successful resolution.

The summit’s proposals reveal that the EU’s political leaders remain in denial or are blind to the true nature of the crisis that afflicts the euro-zone and, until the politicians awake from their slumber, the odds of a successful conclusion to the sorry episode is still not much better than a coin toss.

The EU’s leadership continues to believe that profligate government spending among the euro-zone’s periphery is the central problem and, insist that fiscal austerity is the only path to future stability.  With this in mind, the summit proposed that euro-zone members adopt constitutionally-binding debt brakes requiring states to maintain balanced budgets, defined as structural deficits of no more than half a percentage point of GDP.

The idea that the euro-zone’s woes simply reflect fiscal mismanagement is simply not borne out by the facts.  Indeed, before the crisis struck, only Greece and Italy showed government debt ratios that were well above the Maastricht limit of 60 per cent, while both Ireland and Spain sported public debt fundamentals that seemed to be comfortably below the danger zone.

The euro-zone’s periphery came unstuck because large private sector deficits led to unsustainable external imbalances that had to be financed in a foreign currency – namely, the euro – since member states had given up their currency sovereignty upon admission to the single currency.  This meant that euro-zone countries with persistently large current account deficits and dangerous levels of foreign debt as a result, were vulnerable to a sudden reversal in capital flows.

Put simply, euro member states are users of currency rather than issuers of currency and, as a result, must obtain euros to meet international payments as they fall due.  The euros required can be obtained through exports, borrowing or asset sales.  However, the euro-zone’s periphery increasingly relied upon the willingness of member states with current account surpluses to finance their deficits.

The music stopped once the global financial crisis struck and, in many cases, the external deficits were effectively nationalised by government in an effort to prevent an economic meltdown.  Not surprisingly, fiscal deficits and government debt-to-GDP ratios subsequently exploded.

This fact seems to have gone unnoticed by Europe’s leadership, who continue to pursue the fiscal austerity route.  Those of a bullish persuasion will argue that the constitutionally-binding debt brakes are a welcome step on the road to an eventual crisis resolution.  However, the measure simply enshrines pro-cyclical fiscal adjustments in the currency union’s struggling member states, without any countervailing transfers from a central fiscal mechanism akin to that which exists in the United States.

Signing up to this deal is nothing short of economic suicide, as member states are effectively being asked to adopt contractionary fiscal policy when a recession strikes.  The downward pressure exerted on the economy under such an approach could only be overcome by higher domestic consumption and investment or a trade surplus.

The former would be most unlikely since the private sector is already heavily indebted across the periphery, while the latter was not adequately addressed at the summit.  Simply put, the chronic current account deficits in the periphery are the mirror image of the surpluses in the core and, these imbalances must be considered in any attempt to resolve the crisis.

The current approach is designed to make matters worse and all the more so, given that the member states issue debt in a foreign currency and have no credible central bank backstop.  The deal to save the euro does the exact opposite and, if implemented, would hasten the single currency’s demise.  As a result, financial market stress is virtually certain to continue in 2012.

As Otmar Issing, the prominent German economist once noted, “There is no example in history of a lasting monetary union that was not linked to one State.”  Investors take note.

 

Previously posted on www.charliefell.com

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Big Ben, Tower Bridge and The London Eye are icons of Great Britain, but there’s also an interesting culture about its currency, the British pound sterling—and it doesn’t require traveling on a double-decker bus to learn.

As the European economic crisis continues, the United Kingdom is emerging as a safe haven for investing. Demands for British government bonds are rising and attention is now being turned to the pound because it’s up 2.1 percent against the euro since early September. But Britain, like so many other euro zone nations, is facing its own economic challenges and is implementing austerity measures that are causing anger. These actions are prompting the country’s first general strike in many years.

A history dating back to 1158 during King Henry II’s rule, the British pound users include the U.K, its Crown Dependencies (the Isle of Man and the Channel Islands), the British Overseas Territories of South Georgia and the South Sandwich Islands. This is our fourth post in our series about “currency culture,” where we examine the history of different world currencies and how they play a role in popular culture (see our previous posts about Italy’s lira, Switzerland’s franc and Greece’s drachma). With an introduction as regal as Buckingham Palace, here are some interesting facts about the pound sterling:

  • Formally called British pound sterling; abbreviations “ster.” and “stg.” are sometimes used
  • Sterling component is the result of the sterling silver metal that composed the old coins
  • World’s oldest currency still in use
  • History dates to 1158 when England’s King Henry II introduced new metal coins to replace silver pennies that had been previously circulated for centuries
  • Sterling is the fourth most-traded currency in the foreign exchange market (after the U.S. dollar, euro and Japanese yen); the third most-held reserve currency in global services
  • Banknotes include denominations of £5, £10, £20, £50; coins of 1p, 2p, 5p, 10p, 20p, 50p, £1, £2
  • The royal wedding of Prince William and Kate Middleton was rumored to have cost as much as 80 million pounds, compared to the wedding of Prince Charles and Diana Spencer, which was priced at about 4 million to 30 million pounds
  • “The Twilight Saga: Breaking Dawn Part 1” shattered U.K. box-office records, sucking in 13.9 million pounds
  • British actor and Harry Potter star Daniel Radcliffe has earned 51.8 million pounds during his career, making him Britain’s richest and youngest entertainer
  • The 2012 London Olympic Games is reported to have a contingency budget of 2.7 billion pounds, and finances for security at the event are expected to rise by about 275 million pounds (about double the original estimate)

Like a course at Oxford University, we hope these facts are now pound-ed into your currency intelligence for your next tea-and-crumpet conversation. Until next time, cheerio!

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

When most people—at least us here at Currensee—hear Italy, we associate the delicious food. Because we’re located footsteps from Boston’s historic North End, the scrumptious smells of cannolis far too often waft into our office. After all, as Dean Martin croons, that’s amore.

While sweeping seascapes of the Amalfi Coast may race into your head as you swirl your pinot grigio, things in the boot-shaped country haven’t been a bella vista. Because of the European economic crisis, Prime Minister Silvio Berlusconi said Nov. 8 he would resign his prime ministership after parliament passed urgent budget reforms. During his service, Berlusconi also faced strings of humiliations, scandals, defeats and failures.

Aside from Berlusconi’s resignation, Italy is in fiscal turmoil as the country’s debt is larger than the combined economies of Portugal, Ireland and Greece. Experts worry that the Italian economy, the eighth largest in the world, will fuel a potentially unmanageable economic situation because its bonds are shattering the 7-percent level to a new high. As history showed, once Italy’s fellow PIIGS nations—Portugal, Ireland and Greece—surpassed 7 percent, their borrowing costs increased and eventually caused them to seek bailouts.

With a history dating back to Charlemagne’s reign in the late 600s and early 700s, the lira’s (lire for plural) official users are Italy, San Marino and the Vatican City. This is our third post in our new series about “currency culture,” where we examine the history of different world currencies and how they play a role in popular culture (read our previous posts about Greece’s drachma and Switzerland’s franc). With an introduction as stylish as a fashion runway in Milan, here are some interesting facts about the Italian lira:

  • Form of currency from 1861 to 2002, including during the Napoleonic Kingdom of Italy between 1807 and 1814
  • From 1999 to 2002, lira was a national subunit of the euro
  • Banknotes available in 1,000₤, 2,000₤, 5,000₤, 10,000₤, 50,000₤, 100,000₤ and 500,000₤; coins available in 5₤, 10₤, 20₤, 50₤, 100₤, 200₤, 500₤, 1000₤
  • Banknotes feature prominent Italians such as artist Raphael, composer Vincenzo Bellini, physicist Alessandro Volta and physician and educator Maria Montessori
  • Lira issued by Banca d’Italia, Italy’s central bank headquartered in Rome
  • Major renovations and restorations to the Coliseum between 1993 and 2000 cost 40 billion lire
  • The traditional Italian children’s song “Mamma Mia, Dammi Cento Lire” means in English “Mom, Give Me a Hundred Pounds”
  • Jimmy Lira is a character in the 2009 video game “The Godfather II,” based on the 1974 crime drama “The Godfather Part II”
  • Her first taste of fame at age 14, actress Sophia Loren was crowned a winner in a beauty contest that included a prize of 23,000 lire
  • Late fashion designer Gianni Versace in his will left his partner Antonio D’Amico a pension of 50 million lire a month (for life)
  • Retired Italian soccer player Robert Baggio in 1990 was sold to the professional soccer club Juventus for 15 billion lire

You may be lir-y about Italy’s current state of politics and economics, but the lira’s history might be just as intriguing as the catacombs of the Vatican and waterways of Venice. If you’re still lucky enough to have the currency, holdfast to it and don’t make him an offer he can’t refuse.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Switzerland is synonymous with the Alps, skiing and chocolate, but behind some of the country’s most famous icons is a rich culture in its currency, the Swiss franc. As Europe’s economic crisis continues toward resolution, what’s most interesting about the Swiss franc is that it’s the only franc still issued in the region.

Dating back to before Helvetic Republic in the late 1700s, the franc’s official users are Switzerland, Liechtenstein and Campione d’Italia. This is our second post in our new series about “currency culture,” where we examine the history of different world currencies and how they’ve played a role in popular culture (read our first post about Greece’s Drachma). With an introduction as sweet as truffles, here are some interesting facts about the Swiss franc:

  • Denoted as CHF for Confoederatio Helvetica franc; alternately, SFr. or Fr.
  • Coins are about 23 millimeters wide, nearly 1.6 millimeters thick and weigh about 4 grams
  • 2010 inflation rate was 0.7 percent
  • Banknotes available in 10, 20, 50, 100, 200 and 1,000 francs
  • Total value of released Swiss coins and banknotes was 49,664.0 million Swiss francs, as of March 2010
  • Saw 2011 appreciation when the Swiss franc rose past U.S. $1.20 (CHF 0.833 per U.S. dollar) as investors sought safety amid the Greece’s economic instability
  • U.S. dollar is often considered a safe haven against the Swiss franc because the Swiss National Bank maintains a large part of its reserves in gold
  • Because of the country’s quadrilingual populace (German, French, Italian and Romansh), Latin is used for language-neutral inscriptions on the coins
  • The Swiss National Bank has been featured in movies such as The Bourne Identity, The Da Vinci Code, Munich and numerous James Bond films.
  • Switzerland’s tradition of bank secrecy, where banks aren’t allowed to provide authorities personal and account information about their costumers unless under certain conditions (e.g., criminal complaints) dates back to the Middle Ages and was codified in a 1934 law

While your mind may race to the final scene in “The Sound of Music” when the von Trapp family climbs the Alps from Austria to Switzerland, there’s – franc-ly – even more to associate the country.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.