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What are safe-haven currencies?

Exchange rates change for various reasons, and unpredictable events like conflict can be a major trigger of volatility. At Global Reach, we want to give you a better understanding of the market so you can make smarter money transfer decisions. So, whether you’re making a transfer for yourself or your business, this blog will explore what can happen to exchange rates and currencies, particularly those currencies that are often referred to as safe-havens, during times of conflict.


What happens to exchange rates during conflict?

Economic data, politics, and unpredictable events like war or conflict can all impact exchange rates. You may already know that a currency’s value, and therefore its exchange rate, changes based on supply and demand. When a country or economic zone is experiencing a steady period—perhaps signified by a stable political outlook or economic data that suggests growth—its currency can increase in value. Additionally, if central banks look as if they may hike interest rates, giving investors a higher return on their funds, a currency may also experience moves higher. On the flip side, in times of conflict and uncertainty, certain currencies may decrease in value as market demand turns toward more stable assets.

To learn more about some of the key events that could impact the currency market in 2022, download our guide to the Political Year Ahead.


What are safe-haven currencies?

In times of crisis or conflict, there may be a sell-off of currencies that are considered riskier by markets in favour of those that are deemed safer. The US Dollar (USD), Japanese Yen (JPY), and Swiss Franc (CHF) are often referred to as safe-haven currencies. These currencies tend to be favoured in times of uncertainty because they’re expected to remain resilient and retain their value no matter what. However, when markets are particularly volatile, it could be a good idea to speak to an industry expert before you transfer to make informed currency decisions.

You can read more about safe-haven currencies in our guide to Understanding Exchange Rates, here.


How can an FX specialist help?

Our Dealing team is made up of some of the most experienced foreign exchange experts in the industry who have moved money overseas for our customers during some of the most volatile global events and market movements. We spend time listening to understand your needs, so you can feel confident your money’s in the right hands. We’ve helped our clients send their life savings overseas when they emigrate, organised frequent salary transfers for those temporarily living abroad, and arranged lump-sum and regular mortgage payments for holiday home purchases all over the world. We can lock-in an exchange rate for up to two years*, help you make quick transfers to capitalise on a great exchange rate, and put in place measures to automatically trade should your exchange rate reach a desired level.  The personal service from our dedicated dealing team is what sets us apart; we focus on the details, so you don’t have to.

To discuss how a currency specialist can help you make the most of your overseas transfers in fluctuating markets, speak to a member of our team on 020 3465 8200, or email [email protected].

*Locking-in an exchange rate will require an initial margin payment