Wall Street Journal: Brevan Howard Asset Management LLP, one of Europe’s biggest hedge funds, is betting against the euro as Greece’s debt crisis nears a boiling point.
The London-based firm, which manages over $32 billion in assets, recently purchased put contracts to sell euros in exchange for dollars, according to two traders. These contracts give the fund the right, but not the obligation, to sell the currency at a fixed price by a specific date in the future.
Brevan Howard’s bets, which are short-term wagers, involve exchanging more than $1 billion and cost several million dollars each, according to one of the traders. If the euro heads south against the dollar in the next few days, the fund would stand to make a big profit.
A spokesman for Brevan Howard declined to comment. The firm’s overall position on the euro is unclear and market observers say Brevan Howard’s bearish bets are likely modest—at least for them—and have trailed off recently. Some of the fund’s traders may also be making bullish euro bets.
Still, the fund’s bearish bets are the latest sign that investors are nervous about the future of the euro in anticipation of a key vote in Greece’s parliament Wednesday on a five-year austerity and privatization plan that the country needs to receive expanded aid and try avoiding a messy default.
