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From Kirsten Bischoff, Opalesque New York:
The sovereign debt crisis in emerging economies is expected to continue to wreak havoc on markets in 2011 and for global hedge fund investors, currency exposure will be a considerable portfolio risk, says a currency specialist.
“Looking ahead to 2011, I think there are a lot of reasons why we will continue to see good volatility, and currencies will remain an important topic. I would say it is very crucial for any international investors to address their FX exposures very proactively,” Thomas Suter, CEO of $1.3bn currency specialist firm Quaesta Capital told Sona Blessing during a recent Opalesque Radio interview.
“With the beginning of the financial crisis we have seen huge increases in volatility of major currency pairs such as the Euro and US dollar. We have seen dramatic movements and that has led to the need to increase currency exposures perhaps more than they were addressed in the old days when the markets were quieter,” Suter says. “Those risks and exposures are being more actively looked at and the interest for currency overlays has increased.”
Costs vs. benefits for choosing currency overlays depend on whether investors decide to take a passive or active approach, Suter explains. A passive approach to currency hedging – one that focuses on risk reduction, ...................... To view our full article Click here
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