The year has been quite eventful, especially in the first half of 2024. Various currencies have exhibited remarkable performances, given that the world economy is not in the best of shape. The local Forex market is affected by policies, geopolitical risk, inflation rates, shifts in interest rates, and capitalization of the forex market in the respective country.
Hence, some currencies performed stronger than others due to the stability and growth rate in their respective economies. In this article, we will look at which currency remained stable in the first half of 2024, which may inform you on which currency is better for investment.
Impact of Prop Trading in Forex
Some of the factors that led to the growth of the Forex market include the increased investment in prop trading. Proprietary trading firms, also known as prop trading firms, allow investors to use their funds to buy and sell financial instruments such as currencies to generate a profit. Hence, prop trading firms are different from the usual investment firms that deal with clients’ money.
There are many forex firms in different countries that offer prop trading, contributing to the strengthening of the financial market and giving some currencies an upper hand. One such firm is Funding Frontier based in UAE, which, according to its funded clients’ review, noted that this is the best prop trading firm where you can invest a small amount of money in large buying and selling currencies. These types of firms together with other forex firms contributed to maintaining the stability of major currencies such as the Dollar and Swiss Franc against other currencies through their funding model.
Another impact of prop trading on the strength of specific currencies is when a prop trading firm identifies an opportunity in a certain currency. That may result in initiating huge trades that lead to the currency becoming popular. This can increase the currency’s value in the market and, in turn, the overall value of the particular currency in the market.
Best Performing Currencies
Here are the top 5 currencies that did well in the first half of 2024.
1. The U. S. Dollar
The U.S. Dollar performed well through the second semester of 2024 to remain the world’s reserve currency. The USD’s resilience was anchored on the Federal Reserve’s decision to maintain higher interest rates than other nations’ central banks. Second, the United States experienced relatively macroeconomic stability compared to other industrialized economies.
The Fed’s action of fighting inflation by increasing interest rates made the USD more appealing to investors seeking better yields. Moreover, the U.S. economy’s labor market is now highly favorable, and consumer spending is stronger than before, which helped to bolster the dollar. Thus, the USD remained a more or less secure investment during uncertain economic conditions.
2. The Swiss Franc (CHF)
The Swiss Franc, commonly considered a safe-haven currency, was stable during the first half of 2024. Investors favored this currency due to the country’s political stability, sound financial system, and low inflation rate.
The Swiss National Bank (SNB) maintained a defensive policy regarding CHF to keep the currency well-placed for investors and purchasers from all over the world. Demand pressure was most especially noted during intense geopolitical risk episodes when investors fled to the resistant Swiss economy.
3. Japanese Yen (JPY)
Although Japan’s interest rate is low, JPY was stronger as a safe-haven currency during world risk turmoil. The BoJ’s continued support of the low-interest rate regime, alongside its attempts at controlling inflation, saw the Yen remain competitive in the Forex market.
Other factors that enhanced the value of the Yen included Japan’s positive balance of trade, the widely held belief that Japan had a surplus and prudent fiscal policy. Investors turned to the Yen as a refuge during speculation of a high-risk environment, elevating it to other competing currencies on the market.
4. The Singapore Dollar (SGD)
The Singapore Dollar was also among the top performers of the Asian currencies in the first half of 2024. Sound macroeconomic fundamentals such as high economic growth, appropriate trade partners, and effective monetary policies boosted the SGD. The Monetary Authority of Singapore was quite proactive in lowering inflation, which has helped bring stability to the currency.
5. The Australian Dollar (AUD)
The Australian Dollar was rather robust in the course of the last six months due to the increase in crude oil prices and the demand for the goods exported by Australia. The close trade relationship between Australia and China and the wealth of natural resources further boosted investors to consider AUD and reap the recovery from the economic crisis.
In particular, the RBA was instrumental in defending the AUD through the appropriate use of monetary policies that fostered economic expansion while curbing inflation. Export revenues, an increase in global commodity prices, and stable macroeconomic fundamentals supported the AUD against its major counterparts.
