Relative Currency Valuations and Portfolios

Relative currency valuations are moving and moving fast. Driven by multi-speed monetary policy globally, investors are preparing to hedge currencies.

Aug 2022

Alternatives

Investors Review Currency Hedging

Currency research has boomed in our feeds. There are so many dynamics at play and parity levels are being reached. Key themes being researched include the the strength and weaknesses of the major trading block currency pairs, including the Yen, Euro, Sterling and the current currency champion, the all dominant U.S. Dollar.

With monetary policy driven rate hikes moving at different speeds across the zones, as Central Bankers accept they have been behind the curve, currency valuations are moving, and moving fast. Which in turn will have a second derivative impact on domestic (imported) inflation, and the manageability of a soft landing. The impact across the entire Institutional portfolio cannot be ignored.

FX trends are impacting asset classes.

Currencies

The Japanese yen has Never Been Cheaper

Mondrian Investment Partners

Mondrian Japanese Yen research on RFPnetworks depicted by red car driving down narrow Yapanese street

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Against the US dollar, the Japanese yen is at a 24-year low. Over the same period, the domestic purchasing power of the dollar has almost halved, whilst that of the yen has barely moved.

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