Cause and FX

European tourists in the US know only too well that bargains are to be had due to the relative weakness of the dollar to the euro and sterling. So it’s no surprise that high-net-worth individuals in search of greater returns are also looking to invest in foreign exchange-linked products. By Patrick Fletcher

As the significance of the recent US dollar depreciation becomes apparent (see box 1, p.21), the national press has become more interested in reporting on the effects of currency movements. At the same time, however, many private banks have picked up on the potential yield available when using structured products in the currency markets, as well as creating innovative hedging tools.

A combination of low volatility in equity markets and low interest rates on deposit accounts has led many