FX&MM – Currency Wrap
18 September 2009
The best performing currencies this year have been those with the most undervalued, high beta and commodity linked economies like Canada, Australia and in Scandinavia. Returns have been especially significant since February when leading indicators and business surveys began to turn upwards and official interest rates around the world reached their trough.
Although almost all G10 currencies have appreciated against the dollar and the Yen, the countries with limited negative growth impacts and smaller rises in unemployment have had the best currency performance in 2009. These countries are likely to be among the first to recover above pre-crisis levels of economic activity. This also fits our investment preference for currencies, countries and companies with sustainable growth and yield at a reasonable price.
Now that some of these currencies are closer to fair value calculations and that the end of the global recession has now been discounted, we expect performance in these currencies to slip back towards the year end, as the seasonal risk reduction and money market year effects take hold.
Ken Dickson, Investment Director – Money Markets and Foreign Exchange, Standard Life Investments
This article was first published in October’s edition of FX&MM Magazine.
