Foreign exchange funds that have based themselves around the strength of the Euro might be running into trouble, according to Reuters. The currency, strong in recent months, has been performing in a lukewarm fashion as of late.
Over the past 12 months, before Junes decline, the Euro had climbed 22% against the dollar. Foreign exchange funds have used this to their advantage, gathering impressive returns from the descent of the U.S. Dollar in the foreign currency market.
The month of June saw a turnaround, and many industry analysts say that returns on foreign exchange funds that have previously been doing well, have dropped off significantly. In June, the Euro fell about 2.3% from May, closing at $1.1510 against the dollar. It closed at $1.1722 at the end of May.
Some were directly blaming the Euro for their poor results in June, while others managers see the downturn as a short-term issue. Many firms still hold long positions on the currency. In addition, despite the recent setbacks, it is estimated that many Foreign Exchange managers reliant on the Euro are still posting positive returns overall.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.