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Alternative Market Briefing

Why has it been such a difficult environment for currency traders ?

Friday, October 11, 2013

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Benedicte Gravrand, Opalesque Geneva:

Thomas Suter is CEO of Quaesta Capital AG, which manages in excess of $2.5bn in investment products and currency risk management mandates. He has more than 20 years of experience in financial markets and has been with Quaesta since its 2005 start. He recently spoke to Sona Blessing on Opalesque Radio about investing in currency strategies in the current environment.

The FX (foreign exchange) market, in which currencies are traded, is the largest financial market in the world, with currently around $5tln being traded daily.

Over the last five years, following the financial crisis, foreign exchange as an asset class has not done so well, Suter says. 2008 was a great year for FX and there was much enthusiasm around this asset class due to is liquidity, transparency and diversification (due to low correlation) benefits. Several banks, specifically Citibank and Morgan Stanley, started promoting new platforms supporting FX managers.

But the 2008 momentum faded away. There has not been much action among the major currency pairs, and low volatility. "Combine that with booming equity and fixed income markets and this has not been helpful for a topping of currencies as an investment opportunity," Suter notes.

According to the Bank for International Settlements (BIS), currency trading kept increasing in the first year of the financial c......................

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