Currency hedging
Performance of currencies ( in £) in 2022
Dollar ( 11.6 %) Yen ( -2.0 %)
30 % |
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25 % |
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20 % |
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15 % |
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10 % |
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5 % |
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0 % |
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-5 % |
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-10 % |
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Jan22 |
Mar |
May |
Jul |
Sep |
Nov |
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Source : FE Analytics |
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“ Dabbling in currencies to make money is a mug ’ s game because movements are too hard to predict ,” says Simon Edelsten , manager of
Mid Wynd International . Anyone who doubts this should consider the best time to back sterling in the past year – two working days after the infamous mini-Budget . It is worth casting your mind back to that time and asking yourself whether you really thought the pound was ideally positioned to rally against the dollar .
However , Edelsten says this doesn ’ t mean investors can afford to ignore currency movements completely . “ Over time , exchange rates between currencies should – in theory – mean similar goods in different countries cost a similar price ,” he adds . “ Anyone who has been to New York recently and tried to buy a Big Mac will realise that ’ s not the case . It ’ s a third more expensive than in Leicester Square . “ Eventually , these imbalances should correct . Knowing this may
Issue 91 - January 2023 / 9 /