U.S. money managers are reversing a decade-long trend of diversifying away from the dollar, leading more strategists to conclude that a rally that's taken the currency to a four-year high is just getting started.

Investors based in the U.S. hold 19.3 percent of their $35.8 trillion of equities in foreign shares, down from a peak of 21.1 percent in 2009, according to new Federal Reserve data tracked through June by UBS AG. After surging from 8.3 percent in 2003, the proportion of their $11.4 billion of bonds, excluding Treasuries, that is in foreign debt has stabilized at 20.9 percent.

"This, and the fact that relative growth is better in the U.S. and the currency is still cheap, means the dollar will rise further," Geoffrey Yu, a senior currency strategist at UBS in London, said by phone on Oct. 16.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.