Forex structurers prepare for inflation
Global foreign exchange markets were dominated by the same themes for most of 2010, with a focus on the US economy and quantitative easing in light of weakening US data. But inflationary pressures and possible interest rate hikes are presenting structurers with new challenges. By Rebecca Hampson
If anything gave investors some kind of return during the credit crisis it was foreign exchange. Although it did not emerge totally unscathed, it has since begun to be regarded as an asset class to compete with equities and commodities. Last year was no exception as investor demand for currency-linked structured products increased, but forex structures will have to cope with fears of rising inflation and hikes in interest rates this year.
“Generally, forex is a very liquid way to express a
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