Crowded Dollar Trade May Backfire: Hedge Funds

Crowded Dollar Trade May Backfire_ Hedge Funds

In the latest developments, the weakening of dollar prices and shorting due to them is becoming a squeeze, saying some hedge funds. However, there are conjectures that the practice can backfire in future.

On the one hand, AMP Capital Ltd has trimmed its bets (bullish) on currencies of emerging markets, while on the other, BlueBay Asset Management has short its dollar position. The company oversees a whopping more than $ 60 billion.

Now, the investors who have been piling on the short-positions for the last 1-2 years may witness their profits evaporate.

In the last four months, the bets are assembling against the dollar, and the currency has witnessed a sell against its ten peer group. It’s noticeable that no hedge fund is indicating or predicting the strengthening of the dollar. They all are pointing as the possible risk. 

It is reasoned that the tussle between Washington-Bejing is leading to the downfall of the dollar.

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