Lorne Gavsie's blog

Currency management part two – In a portfolio context

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Developing currency management strategies, and executing on them, is an integrated and multipart process. Market positioning, capital flows, interest rates, geopolitical risks, economic fundamentals, technical analysis (and the list goes on), collectively contribute to currency direction. Experienced currency managers tend to increase their currency positioning (or hedge) when their views (or concerns) are strongest, and trim-back when the view has played out, or are proven wrong. Conversely, when pulling back the throttle, the safe-zone should be well defined – what is the most effective n

Chinese yuan (CNY) move: devaluation or revaluation

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China’s monetary authority took the markets by surprise last week, allowing its onshore currency (CNY) to weaken roughly 3% against the U.S. dollar. Western markets, media and certain U.S. congressional officials were quick to cry foul, suggesting China was devaluing its currency to gain an edge – a deliberate act of currency war.  In fairness, the timing was suspect, coming days after very weak export numbers and amid concerns of an economy slowing down too quickly.  

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