Investors could take increased protection against losses stemming from a weaker dollar given that global portfolios are heavily invested in U.S. companies, Swissquote Bank analyst Ipek Ozkardeskaya said in a note.
This could weigh on the dollar’s valuation in the medium term, she said. Investors previously didn’t feel the need to hedge against a weaker dollar because in times of market volatility the currency typically strengthens on safe-haven flows.
“But recently, the dollar has been weakening despite rising volatility, and the latter increases hedging costs, leading to an unusual negative correlation between the dollar and volatility.” This is creating a “serious headache” for investors, she wrote.
Source link
Related Articles
-
-
-
-
