In Big Reversal, Yen Poised To Finish as Weakest Major Currency

December 6, 2013 1 Comment

Dec 4, 2013

In Big Reversal, Yen Poised To Finish as Weakest Major Currency

By Ira Iosebashvili

If there was an award for the most bi-polar currency, the yen would be a shoo-in. Assuming price levels don’t change much in what’s left of 2013, the yen will have been either the weakest or the strongest major currency against the dollar in each of the last six years, according to research by Deutsche BankDBK.XE -0.98%. It’s down about 18% this year thanks to a strong dollar and Japan’s attempts to finally end years of chronic deflation and lackluster economic growth.A look back further in time shows that the see-saw performance is a continuation of a 15-year pattern. Since 1998, the yen has finished five separate years ranked as the world’s strongest currency, and five years ranked as the weakest. It is very much a currency of extremes.

The strongest G10 currency against the dollar this year? Believe it or not, it’s the euro. While most other major currencies have fallen against the dollar, the euro has risen 3% so far this year. Viewed by some people just a year ago as the doomed poster child for everything that was wrong with the beleaguered euro zone, the single currency has more than held its own, buoyed in part by investors seeking to take advantage of high yields  in countries like Italy and Spain. While the euro has been the worst performer among major currencies three times in its brief existence, this is its first time at the top since its creation in 1999.

Deutsche Bank predicts 2014 and 2015 could be big years for the dollar. Strategist Alan Ruskin says the buck has a high probability of appreciating against all other G10 currencies in one of the next two years. It’s accomplished that feat just six times in the last four decades. Aiding the dollar will be the U.S.’s relatively strong balance sheet and a potential move higher in interest rates by the Federal Reserve, Mr. Ruskin says.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

One Response to In Big Reversal, Yen Poised To Finish as Weakest Major Currency

  1. Bob Thomas's avatar Bob Thomas says:
    January 8, 2014 at 2:53 am

    Americans are delusional about the value of the dollar.
    It would be helpful if you would periodically post a list of the Top Ten strongest currencies. Thanks for your consideration.

    Reply

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