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The debate on the future of the US dollar’s global role often centres on trade flows and official reserve holdings. In reality the dynamics are more nuanced.
QIC's Liquid Markets Group's latest paper identifies currency hedging behaviour as a critical factor. With non-US investors holding more than US$30 trillion in US assets, even modest shifts in hedge ratios can exert significant influence on the dollar.
Against this backdrop, the importance of active currency management is increasing, providing investors with a disciplined approach to navigating currency risk in a changing global landscape.