Funds are betting on a $ 10 billion drop in the dollar … What’s going on?

With the start of the new year, hedge funds continued to bet on the falling dollar and injected more liquidity into investment betting tools.

What appeared to be expectations from these funds that the green currency will continue to decline in 2021 after the losses it suffered last year, as a result of stimulus packages and quantitative easing policies carried out by the Reserve. federal government.

A report from the UK’s Financial Times newspaper says hedge funds faced with the falling dollar have raised their positions to their highest level in about 3 years, amid indications of the pursuit of green currency, which has risen sharply. ‘about 1% since the start of this year.

Official U.S. data shows that individual investors and major investment funds injected around $ 10 billion through January 12 into hedging contracts, the highest level recorded since March 2018.

And among a larger group of investors, including asset managers, the bet is on cumulative negative dollar returns at the highest level in about 10 years, in a state of uncertainty surrounding the next steps for the Reserve. federal government, which used all of its financial policies to deal with the consequences of the Corona pandemic.

“The dollar betting community believes this will happen in the near future, and there is a good reason for it, as all market fundamentals indicate that the dollar will remain weak over the medium term,” the newspaper told the newspaper l Lombard Odier currency analyst.

The dollar lost about 7% of its value last year, after the US Federal Reserve agreed to cut interest more than once to support the world’s largest economy amid the still-raging pandemic until the moment on the world economic scene.

The fall in interest rates sparked a wave of emigration to investment tools offering good returns, which caused record inflows to emerging markets, especially China, whose economy was able to escape the consequences of the pandemic and recorded positive growth last year.

Other analysts play down the wager on the currency’s decline, while a Bank of America currency market analyst tells the newspaper that bidders’ positions on green currency decline are approaching levels that typically assist in subsequent periods of sharp rise for the currency of the world economy.