Exchange Rate FAQs

What is a Safe Haven Currency?

A safe haven currency is a currency that investors move their money to in times of upheaval. Factors affecting their decisions can be political, economical, natural or financial. Other names for a safe haven currency are Hard currency or strong currency. Many currencies have been classed as safe haven over the years but due to the continually changing nature of the financial markets none of them stay that way for long. The countries most often listed as safe havens are those that continually have a high trade surplus, China is a recent example of this. Previous safe haven currencies have been the U.S dollar, Euro, Pound Stirling, Swiss Franc, and Japanese Yen.

One measure of safe haven currencies is how much they are favoured in a countries foreign exchange reserves.

When a currency is regarded a soft currency there are expectations that the currency in question is set to fluctuate erratically or depreciate in value against other currencies.