Bridgewater Notes Hedging Strategy As Central Bankers Go Activist

The era of a nation’s currency being used as a monetary tool is likely to produce price trends and requires a certain hedging method, a strategy document from one of the world’s largest and most secretive hedge funds reveals

As central bankers and their sometimes deflation fearing staff scramble to make sure their never before seen quantitative stimulus doesn’t fall flat like a stale glass of Coke, a February 6th Bridgewater strategy note reviewed by ValueWalk observes a unique correlation consideration.

Forget macroeconomics and supply and demand, those are old school methods of determining a currency’s value

Hedging currency risk was, at one time, largely a macroeconomic affair where the natural supply and demand balance in each economic region dictated the currency’s value. When a government’s economy faltered, its currency would lose value. This in turn would stimulate the economy because it would make the country’s goods and services cheaper and encourage investment in the region.

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