Currency moves explainer: The causes and impact on portfolios and the options for action

Can be biggest risk

In mid-July, the euro and the dollar hit parity with $1 equivalent to €1. Then the euro fell below the dollar for the first time in nearly 20 years.

While currency fluctuations are always around, there have been some starker, more significant shifts in recent months and it is important for investors to understand what is causing these changes, how it is impacting portfolios and what changes they may need to make as a result. The causes Currencies shift for all sorts of reasons, including sentiment, economic data points, central bank policy trade flows and more. In the current scenario, interest rate rises are playing a significant role and "any hint of policy moves from central banks are being scrutinised instantly, causing big ...