Bloomberg ran
an interesting article this morning. The article contained an interview with
Jens Nordvig, a senior currency strategist in New York at Goldman Sachs (NYSE: GS). Nordvig said the top currency trade for 2008 will be to sell the U.S. dollar against a basket of Asian currencies, including the currencies of Malaysia, Singapore and Taiwan.
In the article, Nordvig cites two reasons why this trade should work next year:
- Asian central banks should allow faster currency appreciation to offset inflation in their home countries
- It is becoming costlier for the central banks to enter foreign exchange market
The Malaysian, Singaporean and Taiwanese currencies will each gain about 5% to 10% against the dollar in the next year, according to Nordvig.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.