Jim Rogers, the famed billionaire investor, was interviewed on CNBC’s “Kudlow & Co.” yesterday evening. Rogers rarely is wrong, and is an acknowledged global investing expert.
He said he is very long the yen vs. dollar on the theory that the Japanese carry trade will come to an end, resulting in investors selling foreign currencies to buy yen in order to pay off their yen loans.
Here’s a street.com article explaining the yen carry trade and the impact of an unwinding:http://www.thestreet.com/s/simplifying-t…
Even this article misses the main point that investors engaged in the yen carry trade sold yen to buy foreign securities denominated in foreign currencies. To unwind the trade, they must sell the foreign securities, and convert the foreign currencies back into yen to pay off the Japanese yen short positions or loans. This unwind will directly create immense demand for yen.
My second choice for best currency to appreciate against the dollar would be the aussie. Unlike the loonie, it hasn’t even reached par against the greenback, despite much higher yields and a much stronger fiscal condition in Australia. The Australian economy has been powered by demand in Asia for its commodity exports.
However, if oil and other commodity prices fall, both the aussie and the loonie likely will fall against the greenback.
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NZD>NOK>AUD>CAD>EUR>DDK>SGD>CHF>GBP>SEK>RUR>HKD>MXN>ZAR>USD>JPY |
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