While I'm not against investing in foreign currencies, it is not something that I advocate on a long term basis. If you are going to buy foreign currencies, it should be for speculative purposes and for the short term. It seems that a buy and hold is not the best strategy for holding foreign currencies, especially since there are none that are backed by gold or any other commodity.
I am an advocate of the permanent portfolio as described in Harry Browne's book Fail Safe Investing. Part of that portfolio consists of gold. There is no place for foreign currencies.
There is a mutual fund (symbol: PRPFX) that is supposed to somewhat mimic the permanent portfolio. However, the mutual fund changes the formula a little and puts a small percentage in silver and Swiss francs. I think the big difference is that the mutual fund is actively managed. If the Swiss central bank started creating new money like crazy, the mutual fund could change its position.
The permanent portfolio (not the mutual fund) is supposed to be an "investing for dummies" portfolio for those who don't have the time, interest, or knowledge to actively manage their investments. However, the permanent portfolio is also there for active traders who just want to keep a portion of their money safe and sound from the uncertainties in the world.
There are a couple of reasons that I suspect on why Harry Browne did not include any foreign currencies in the permanent portfolio setup. First, as just mentioned, what if a particular central bank changed policy? It would be easy to say that the yen and Swiss franc have been the best currencies due to a tighter monetary policy by their central banks. But things can change over time and this would mean that the permanent portfolio would not be very permanent.
Second, all major currencies are fiat currencies. They are not backed by gold or silver or anything else. This means that there is virtually no limitation on central banks in creating more new money. If you buy yen and the Japanese central bank is devaluing at a rate of 5% per year while the U.S. central bank is devaluing at a rate of 10% per year, you will still be losing money in yen. You just won't be losing as much as those who hold U.S. dollars.
Gold makes up 25% of the permanent portfolio. This is your protection against inflation. It makes it unnecessary to invest in foreign currencies.
There could be a few possible exceptions to this. If you live in the U.S. and your income is all in U.S. dollars, then it would seem unnecessary to invest in foreign currencies as long as you have gold as an inflation hedge. However, let's say you do business in another country and buy a lot of goods from there. Or let's say that you are retired and you spend 4 months a year in another country. In these special scenarios, it might be beneficial to hold a portion of your cash/ cash equivalents in the currency of this other country.
In conclusion, other than certain special situations, I see no need to own foreign currencies. With that said, I am not against the idea for speculation for short-term gains. Just remember that, at least as of right now, all of the major currencies in the world are fiat currencies. That makes gold a better hedge against a depreciating currency, rather than another depreciating currency.