Thought Leadership

Multicurrency Plus Strategy 3rd Quarter 2008

October 27, 2007

A financial storm swept through world markets during the third quarter and major foreign currencies were buffeted along with global equity, commodity, and bond markets. In one of the great ironies of this period, the dollar rose sharply as the U.S. financial system neared collapse, the economy slumped, and fears of another Great Depression inspired the greatest equity market collapse in decades. While it will be some time before historians are able to place these events in their proper perspective, it seems reasonable to conclude that the recent sharp dollar rally was less a reflection of U.S. economic strength, than a seizure – the forced repatriation of funds as global investors de-levered, brought their dollars home, and closed out foreign carry related positions that were either no longer profitable, or no longer tenable.