Jane avoids currency calls as volatility continues

ON ASSET ALLOCATION

Victory rarely comes without a price. Saving the world economy from recession was never going to be cheap and the West is now dealing with the aftermath of their successful yet costly actions.

The sharp movements in global currency markets in recent months speak volumes about investors’ concerns over the record levels of sovereign debt in countries such as the UK and Greece. Foreign exchange markets are a good external barometer of a nation’s health and the one place investors can express their view on a government and its economic strategy. With the UK election imminent and the situation in peripheral Europe not fully resolved, we can expect more volatility in currency prices, at least in the short term. Given such uncertainty, we think hedging foreign currencies back into st...