Foreign currency trading basics: Understanding the basic classification of foreign currencies

Foreign exchange (FX) is currently the most popular, heavily traded, and largest financial market in the world. Investors can profit by buying and selling different currencies, capitalizing on fluctuations in exchange rates. For example, an investor can enter the market when a currency weakens and sells it when the rate strengthens, earning the difference. If the exchange rate increase doesn't meet expectations, you can always hold onto the currency for future travel or earn interest through foreign currency fixed deposits. Therefore, FX investment is considered a relatively stable option.

What types of foreign currencies are there?

If you're buying and selling foreign currencies for investment purposes, it's important to understand that currencies can generally be categorized into four types:1. Policy-Based Currencies:These currencies are largely influenced by central bank policies, typically related to interest rates and inflation. Their value is affected by government or central bank monetary policy decisions.Examples:US Dollar (USD): The US Federal Reserve adjusts interest rates, implements quantitative easing or tightening policies, and current tariff policies all impact the supply and demand for the US dollar based on economic data and market conditions.Euro (EUR): The European Central Bank adjusts interest rates and other monetary policy tools to stabilize the economy and control inflation. The Euro's value is also influenced by the economic performance and policy coordination of its member states.2. Safe-Haven Currencies:Safe-haven currencies are those that investors tend to flock to during periods of economic instability or market turmoil and are generally seen as safe assets.Examples:Japanese Yen (JPY): Japan’s stable economy and relatively low inflation rate make the Yen particularly attractive during times of uncertainty.Swiss Franc (CHF): Due to its stability and conservative fiscal policies, the Swiss Franc is frequently used as a safe-haven asset.3. Commodity-Based Currencies:These currencies are closely linked to the price of a particular commodity (such as oil, metals, etc.) and often come from resource-rich countries.Examples:Canadian Dollar (CAD): Because Canada has abundant oil resources, its exchange rate is closely correlated with the price of crude oil.Australian Dollar (AUD): Australia is a major exporter of minerals, and its currency value is affected by commodity prices.4. Emerging Market Currencies:Emerging market currencies come from developing economies, which have higher economic growth potential but also face higher risks and volatility.Examples:Chinese Yuan (CNY): China’s currency, as the currency of the world's second-largest economy, is closely watched by the market.Indian Rupee (INR): India’s currency, which is gaining importance with economic development.Beyond these factors, exchange rates are also influenced by other considerations. Therefore, it’s important to always be aware of the risks and potential losses resulting from fluctuations in exchange rates.

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WeLab Bank Best Rate

WeLab offers a competitive exchange rate^ , this is the WeLab Bank Best Rate!! Simply successfully exchange foreign currency using the WeLab Bank App, and you can exchange for the corresponding currency at a best-in-class rate*.Learn more about foreign exchange: Exchange Currency with Ease

Zero Fee on Cross-Border Transfers

During the promotion period, all outbound remittance transactions successfully made through the “Cross-Border Transfer” function of the WeLab Bank App are exempt from WeLab remittance fees. The actual waived fee amount (HK$0) will be displayed directly in the WeLab Bank App when you submit the remittance transaction.Learn more about global remittance: Guide for Global Remittance

Daily Exchange Rates at a Glance

And every day, WeLab Bank helps you compare[PC5] [CY6] exchange rates from various banks. Getting a good rate to exchange foreign currency is easy.Learn more about daily exchange rate: Compare the best exchange rates with AI

Security

WeLab Bank is a licensed bank in Hong Kong, and your deposited foreign currency is protected by the Deposit Protection Scheme, with a maximum coverage of HKD 800,000 per depositor, making it safe and reliable.Learn more: Deposit Protection SchemeSo, whether you’re investing in foreign currency or traveling, earning the spread with WeLab Bank is that simple!

^Terms and conditions apply.*Please refer to Compare the best exchange rates with AI for details.Disclaimers: Currency exchange involves risks. Foreign exchange markets are subject to unpredictable fluctuations. If you choose to convert your HKD or foreign currency deposit to other currencies, such foreign exchange transactions will be subject to risk arising from exchange rates fluctuation. As a result, you may suffer losses. The information above is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter any transaction.