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Dollar's Turning Point Aided by Investor Reversal

Waning interest in overseas stocks could bolster U.S. currency's gains.

By Liz Capo McCormick and Ye Xie, Bloomberg | Updated on October 20, 2014

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.

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