Most of us know that US dollars are highly suitable for inclusion in a currency investment portfolio. We know equally that Italian lire should not be represented there. As the types of currency instrument and their denomination multiply, intuition is less likely to be sufficient. Should the Italian lira not be considered, even when yielding 35 per cent per annum in the euro-market? Does that gem among currencies, the Swiss franc, lose glitter when its interest rate becomes negative? Multi-tiered money presents even more complex problems for appraisal — for example which type of Belgian franc should be selected? A methodology is developed here for ranging currencies in a continuum from ‘hard’ to ‘soft’ according to their investment appeal.
KeywordsExchange Rate Interest Rate Real Interest Rate Foreign Exchange Market Swiss Franc
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