Currency Strategy
Book

Currency Strategy

The Practitioner's Guide to Currency Investing, Hedging and Forecasting

Callum Henderson
Wiley, 2002
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Recommendation

In 1971, President Richard Nixon ended the convertibility of the dollar into gold and thereby scotched the mechanism of international agreements and regulations that had governed the world monetary system since the end of World War II. Over the ensuing decades, the once-stable global monetary environment became an exciting, volatile new source of risk and opportunity. Manufacturers saw their fortunes rise and fall as currency shifts favored them or, alternatively, their competitors overseas. Financial institutions discovered new opportunities and dangers in fast-moving currency markets. getAbstract.com recommends this book for its detailed and generally clear, albeit often tedious, introduction to the tools, techniques and strategies readers may use to manage risk or speculate in the world’s biggest financial arena - the unregulated international currency market.

Summary

If You Use Money

Everyone who uses money participates in the currency market because every individual buy or sell decision helps determine the relative value of currencies. Speculators have found amazing riches and power in fast-moving currency exchange rates, most famously in 1992, when they forced European financial authorities to scrap the system that governed the relative value of European currencies. Nations have come to eminence or dwindled to insignificance due to currency shifts, as manufacturers also have seen their competitive fate sealed by adverse currency moves.

Economists use sophisticated, elegant theories to explain and justify the currency market. Most such theories are more admirable as intellectual constructs than as accurate representations of the market. Financial engineers have devised an impressive array of exotic-sounding securities and contracts to enable more effective hedging and speculation in currencies. New versions come to market almost daily, often meeting some temporary or idiosyncratic need, and then fading away into the footnotes of financial history.

The currency market did not exist until 1971. Although funds flowed internationally...

About the Author

Callum Henderson heads Emerging EMEA Strategy for a leading U.S. investment bank based in London. He was formerly part of the Citibank FX Strategy team and Manager of FX Analysis in Asia for Standard & Poors. He has written three previous books about Asian economics, including Asia Falling, Asian Dawn and China on the Brink.

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