CHICAGO, Feb 24 (Reuters) – The U.S. dollar has been taking
it on the chin of late. Last week saw the dollar hit a
seven-week low against its rival currency, the euro. The
greenback also declined against a basket of major currencies,
hitting one of the lowest points of the year to date.
The even worse news is that there’s not much anyone can do
about it right now. Investors whose assets are denominated in
the buck can lose value relative to other currencies, and it’s
difficult to find reliable vehicles to hedge against the
Some $4 trillion is traded in foreign exchange every day,
most of it by institutions. It would be nearly impossible for an
individual to have the information or trading capability
available that large banks and hedge funds employ.
What would you need to know to profit? A panoply of data
goes into real-time currency pricing. You’d have to
simultaneously monitor news on central bank policies, inflation,
gross domestic product, retail sales, manufacturing and housing
Trying to hedge the decline – if it even becomes a
longer-term trend – is nettlesome. Exchange-traded funds that
allow you to do this are imperfect vehicles that may not reflect
day-to-day sentiment. And you are also paying dearly to invest
in them, due to high management expenses, so that means making
money in them is difficult.