Re:The Trade of the Century: When George Soros Broke the Bri...
by kasey_junk on Friday May 16, 2014 @08:51AM
(#7755161)
One thing to remember is that the Soros bet was available because the currency was pegged. Everyone (in the west) has learned that to be a bad thing, in part because of this particular bet.
The US has not pegged their currency. They've made other currency policy decisions under the hope that the US currency can handle the debasement (and so far they have proven true).
Remember that when you short a currency, you also are taking a position about all the other currencies in the world. So rather than say you don't like US dollars you need to say, I prefer X to US dollars and think they aren't currently trading at the right ratio (and if you are shorting you have to account for a very expensive transaction cost).
So rather than asking what the play against the US dollar is, ask which currency you prefer. The international markets do this everyday and so far they haven't found a very compelling alternative.
The US has not pegged their currency. They've made other currency policy decisions under the hope that the US currency can handle the debasement (and so far they have proven true).
Remember that when you short a currency, you also are taking a position about all the other currencies in the world. So rather than say you don't like US dollars you need to say, I prefer X to US dollars and think they aren't currently trading at the right ratio (and if you are shorting you have to account for a very expensive transaction cost).
So rather than asking what the play against the US dollar is, ask which currency you prefer. The international markets do this everyday and so far they haven't found a very compelling alternative.