Article : "Shorting the dollar is too risky": opinion of hedge funds.
Source: https://ru.investing.com/news/forex-news/article-2290295
Context :
So, the hedge fund K2 Asset Management is confident that the dollar will continue to grow, since the interest rate in the United States is still elevated, and the AVM Capital fund expects that the increase in treasury bond yields will support it. Asset manager Clocktower Group expects the dollar to rise further if stimulus measures in China fail.
What is meant - in simple words.
To begin with, a hedge fund is a specialized company that investors trust with their money in order to maximize the benefits of investments, due to their high competence in this area (they understand all market mechanisms, assess risks and find the optimal entry point for their clients).
To short, that is, to sell the dollar. That is, in other words, it is too risky to sell the dollar now.
It means that because at the moment the interest rate is the rate on the US dollar is high, due to the non-decreasing inflation expectations in the US, investors will demand them, because they will be attractive in their price (in other words, more "drips" from dollar assets). Therefore, the value of Treasury bonds, which is directly linked to the interest rate, will attract them.
Well, it's probably more interesting to invest in securities at 5% per annum than to invest in some kind of "falling" production (high rates, expensive factors of production, limited markets, etc.).
Regarding the stimulus measures in China.
It means that if the PRC is unable to ensure the inflow of monetary liquidity into its economy (including by reducing the rate on the yuan) for its resuscitation and growth, this will also play in favor of the US dollar. Because major global players (the same investors) will refuse to invest in the real sector of China, withdraw your capital, preferring to go to risk-free assets that today are all the same American government bonds.
