U.S. Dollar Depreciation: What Are You Doing To Compensate For The Fall of The USD?

Discussion in 'Trading' started by ByLoSellHi, Apr 28, 2007.

  1. The fall in the USD against just about every major currency except for the Yen is probably causing many investors and traders some degree of anxiety.

    What, specifically, are you doing to hedge your wealth against the continuing depreciation of the U.S. dollar?
  2. time is a hedge.

    US dollar will eventually appreciate.

  3. The time to "hedge" was 4 years ago, not now.

    The dollar's weakness is closer to over than just beginning.

    Aren't you bearish real estate BLSH?

    Being long RE is probably the best passive hedge against devaluation/inflation one can have.
  4. trazan


    Bought Yen.
  5. As long as it declines slowly its more trouble than its worth trying to avoid it. I usualy go to GLD over long weekends because that's when the dollar usually gets slammed the worst.
  6. Dollar Drops to All-Time Low Against Euro as U.S. Growth Slows

    By Min Zeng and Kim-Mai Cutler


    April 28 (Bloomberg) --
    The dollar declined to a record low against the euro as a slowdown in the world's largest economy reduces the allure of U.S. assets among global investors.

    A Federal Reserve index measuring the dollar against other major currencies sank this week to the weakest level in the index's 36-year history. The yen fell to an all-time low against the euro as falling consumer prices in Japan damped bets on increased borrowing costs.

    ``We're continuing to see weak macroeconomic numbers in the U.S. pan out,'' said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston. ``That is clearly weighing on the dollar.''

    The dollar fell 0.45 percent this week to $1.3652 per euro. It reached $1.3681 yesterday, eclipsing the previous record low of $1.3666, which was touched April 25 and first set Dec. 30, 2004. The euro debuted in January 1999 at about $1.17.

    The U.S. currency slumped yesterday after the Commerce Department reported that gross domestic product grew at an annual rate of 1.3 percent in January through March, after a 2.5 percent fourth-quarter gain.

    ``The market is negative for the dollar now, and this report pushed people to jump to sell the dollar,'' said Robert Fullem, vice president of U.S. corporate currency sales in New York at Bank of Tokyo-Mitsubishi UFJ Ltd.

    Fullem predicted the dollar will fall to $1.3750 per euro over the next month.

    Dollar's Decline

    The dollar has fallen 16 percent against the euro since it began trading in 1999. The U.S. currency has declined 20 percent versus the pound, 36 percent against the Australian currency, 40 percent versus the New Zealand currency and 38 percent against its Canadian counterpart over the same period.

    The Federal Reserve's U.S. Trade Weighted Major Currency Index weakened to an all-time low of 78.99 on April 25 and is down 1.8 percent this year.

    ``We are in a dollar bear market,'' said Brian Garvey, senior currency strategist in Boston at State Street Global Markets.

    The current account, a broad definition of trade that includes investment income and transfers, posted a record deficit of $856.7 billion last year.

    ``The main trend is averse to the dollar,'' said Paul A. Samuelson, professor emeritus of economics at the Massachusetts Institute of Technology and a Nobel Prize winner in economics. ``With the U.S. in moderate slowdown, that's not encouraging foreign savers at the old dollar exchange rate.''

    Boon to Companies

    A declining dollar is benefiting U.S. companies such as McDonald's Corp., EBay Inc. and 3M Co., whose overseas revenue has increased when expressed in dollar terms.

    European companies relying on exports may feel the pinch as a strengthening euro makes their goods less competitive in global markets. A strong euro may prompt European governments to voice concern on the currency.

    The yen declined against 15 out of 16 major currencies after the Bank of Japan yesterday lowered its inflation forecast for this year and a government report showed Japan's consumer prices fell last month.

    Investors are speculating the BOJ will refrain from boosting interest rates at a faster pace, spurring buying of higher-yielding assets funded by loans in Japan, a practice known as the carry trade. The BOJ kept its benchmark rate unchanged at 0.5 percent yesterday, the lowest among major economies.

    The Japanese currency dropped 1.04 percent this week to 163.09 per euro and touched an all-time low of 163.24 per euro yesterday. It was the yen's eighth straight weekly decline against the 13-country currency. The yen also fell 0.71 percent to 119.53 per dollar.

    BOJ `Still Lagging'

    ``The BOJ is still lagging behind other central banks in raising rates, and that's going to continue to drive the yen lower,'' said Marcus Hettinger, a currency strategist at Credit Suisse Group in Zurich. ``We're not going to see any rate increases until at least July.''

    The New Zealand dollar dropped against all 16 major currencies this week, sliding 0.76 percent to 74.21 U.S. cents. Reserve Bank of New Zealand Governor Alan Bollard said April 26 the currency's level was ``unjustified'' after policy makers boosted the benchmark rate to a record 7.75 percent.

    The 13-country euro-region economy grew 2.7 percent last year, the fastest in six years. The region will expand 2.3 percent this year, compared with growth of 2.2 percent in the U.S., according to the International Monetary Fund.

    Benchmark Rates

    The Fed has held its target rate for overnight lending between banks at 5.25 percent since June, while the European Central Bank raised its benchmark a quarter percentage point to 3.75 percent last month.

    The yield advantage of 10-year U.S. Treasury notes over similar-maturity German bunds touched 0.459 percentage point this week, the lowest since November 2004. A narrowing yield gap dims the allure of dollar-denominated assets.
  7. Daal


    If you expect to make more than 20% a year trading holding dollars it doenst make sense to 'hedge' or diversify or whatever bullshyt people push for. You might as well trade and swallow any loss the dollar might have and your in a freeroll in case the dollar doesn't have its typical expected 10% drop a year, your total return will be higher if dont hedge. If you make less, you need to hedge(might as well trade outside the dollar) since the expected drop will dent your returns too highly.
    If your a daytrader you can be in great shape by buying FXE or GLD or regular EUR(in IB)and doing your trading with margin borrowing against them.
  8. the dollar move is overrated. everything is still cheap.. it's not like milk or a foreign car went up 50% in price. the x amount u make still buys the same x amount of milk.

  9. once it's almost worthless, the dollar is going to merge into the amero so that the NWO's most ambitious project, the NAU, will be realized:

    <object width="425" height="350"><param name="movie" value="http://www.youtube.com/v/6hiPrsc9g98"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/6hiPrsc9g98" type="application/x-shockwave-flash" wmode="transparent" width="425" height="350"></embed></object>

  10. This does not surprise me, insisted of solving the problem, lets just transfer our risk to our neighbors, then we can drag down the entire continent down :eek:

    Now the fed can lower rates back to zero.
    #10     Apr 28, 2007