Which Currencies Will See the Biggest Swings in 2022?
- By Bilal Hafeez
- 1 min read
Investors tend to neglect currencies. Either they omit to trade them to earn returns, or they ignore the impact on their international investments. For example, over the past year, a USD-based investor would have made 24% by investing in Japanese equities. Yet the yen-based return was 29% – a difference of 5%.
What happened? The yen weakened against the dollar, so the USD-based investor holding a yen-asset suffered a currency loss. Had they hedged their yen exposure by selling yen and buying dollars in the FX markets, they could have captured the extra 5%.
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