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Currencies: Pension and hedge funds could push dollar down

International Herald Tribune – The dollar may fall to a 10-year low as American pension, mutual and hedge funds increase their purchases of overseas investments.


Three quarters of the money flowing into U.S. mutual funds in the first seven months of the year – $113 billion – has gone into foreign securities, according to Financial Research in Boston.Pensions, hedge funds and endowments are also shifting from U.S. assets, lifting investments in international stocks by 72 percent to $1.05 trillion in the year through February, a GreenwichAssociates survey showed.


The dollar, measured against the currencies of the largest U.S. trading partners, is close to its lowest levels since 1995. Stephen Jen, head of global currency research at Morgan Stanley inLondon, says that about half of the decline in the past three years can be attributed to U.S. investors moving money overseas.


“That does make us bearish on the dollar,” said Michael Metcalfe, senior currency strategist in London at State Street Global Markets. State Street, the world’s largest custodian of investorassets, has seen outflows accelerating, he said. “The home bias of U.S. investors is continuing to unravel.”

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