Economists are predicting that a currency shift could be approaching that will affect nearly every currency in the world. Because currency volatility has the ability to influence the world’s financial markets, the underlying reasons for major currency shifts can have huge effects in the global stock and commodity markets as well. The dollar has been volatile and the euro, pound, Canadian and Australian dollars have also been unstable recently. Market analysts now say even currencies like the Mexican Peso, Brazilian Real and Chinese Yuan will experience massive price shifts in the coming years.
A currency’s buying power is what matters the most and everything from gold to wheat is affected by the import/export relationship of the respective buyer’s or seller’s home currency. The Japanese Yen is a good example because the Japanese government has spent several decades trying to suppress their currency value against the dollar, Yuan and euro in order to stabilize the critical export component of their economy. When the Yen is strong, it weakens foreign demand for Japanese goods and impairs other critical Japanese industries like cars and electronics too. Because the rest of the world is in economic recession and the European Union is experiencing bankruptcy fears and big bailouts, any major shift in a major currency could have a huge impact on commodity prices everywhere. One of the largest threats comes from Brazil, one of the world’s main producers of important commodities like coffee, soybeans, cattle, oranges, and sugar. Any major change in the value of the Brazilian Real could have the effect of increasing Brazil’s exports and flooding the world with cheap commodities or it could move in the other direction and restrict the supply of commodities and cause prices to climb higher.
The global currency shifting effect is due in no small part to the fact that the Internet has now made nearly every major company today, an international company. Large, multi-national companies are so common that a major global currency shift could alter the bottom line for nearly every company in the world and would almost certainly mean major changes in stock valuations too as the world economy drives the stock markets, both in the U.S. and abroad. Because the U.S. is a major commodity producer and a major importer of critical commodities, any significant shift in the currency value, like the dollar returning to its 2001 highs that were nearly 60% above current levels, would have a tremendous effect on the price of grain all over the world.
As a result, any major global currency shift would be tough to contend with in today’s worldwide economic recession. A global currency shift event would have critical importance for both producers and investors as the prices of stocks and commodities would fluctuate unpredictably and the values of the different currencies would have to adjust and adapt to the changing conditions. For the sake of international market stability, it would be better if there were no major shifts in currency at all.
