Dollar Saw ‘Good, Old-Fashioned Safe Haven Buying’: BlackRock’s Koesterich

The video discusses the recent strength of the dollar and its role as a safe haven in times of market risk aversion. It explores the implications for multinationals and asset allocators, especially when traditional hedges like gold and duration are less effective. The discussion also covers the impact of central bank policies on the FX market, highlighting the challenges posed by low interest rates and the search for effective currency hedges.

What has been a recent reason for the dollar's strength?

• Increased gold prices

• Market sell-offs and risk aversion

• Strong economic growth

• Rising interest rates

How might a prolonged period of dollar tightening affect financial conditions?

• It would have no impact

• It would only affect small-cap stocks

• It would reverse some easing and create headwinds for risky assets

• It would ease financial conditions further

What role do central banks play in the current FX market dynamics?

• They are reducing market volatility

• They are pegged at zero and influencing rate differentials

• They are focusing on gold reserves

• They are increasing interest rates

Which currency pair is mentioned as a convex expression in the FX market?

• US dollar vs. Euro

• US dollar vs. Mexican peso

• British pound vs. Japanese yen

• Canadian dollar vs. Swiss franc

Why might currency hedges become more important in the current environment?

• Because of increasing gold prices

• Due to high volatility in the rates market

• Due to muted FX volatility

• Because of stable interest rates