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Hedge funds see profits as central banks print money

(Reuters) – Global central banks competing to push their currencies lower and boost sluggish economies have opened up money-making opportunities for hedge funds this year.

Policymakers from Tokyo to London are freely printing money to lower the relative value of their currencies and make their exports more attractive.

Such overt policies have made hedge fund managers more confident in their bets on currency movements and are encouraging the kind of market volatility on which many of them thrive.

The Group of 20 states (G20) denounced competitive currency devaluations last month but stopped short of censuring ultra loose monetary policies that achieve the same result, irritating governments that do not want to print their way out of trouble.

Japan is planning tax hikes, high government spending and printing yen to combat the stubborn deflation that has dogged the country for decades, while the Bank of England has bought 375 billion pounds of UK government bonds.

Bank governors worldwide are pondering even more controversial methods to boost domestic money supply, making it yet more enticing for funds to wager on the eventual victors.

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