Druckenmiller Recommends Betting Against Australian Dollar

Photographer: Scott Eells/Bloomberg

Duquesne Family Office LLC Chief Investment Officer Stanley Druckenmiller said in August 2010 that he was closing his hedge fund, Duquesne Capital Management LLC, after being worn down by the stress of trying to maintain one of the best trading records in the industry while managing an “enormous amount of capital.” Close

Duquesne Family Office LLC Chief Investment Officer Stanley Druckenmiller said in... Read More

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Photographer: Scott Eells/Bloomberg

Duquesne Family Office LLC Chief Investment Officer Stanley Druckenmiller said in August 2010 that he was closing his hedge fund, Duquesne Capital Management LLC, after being worn down by the stress of trying to maintain one of the best trading records in the industry while managing an “enormous amount of capital.”

Stanley Druckenmiller, who made $1 billion for George Soros as his chief strategist by forcing a devaluation of the British pound in 1992, said investors should bet against the Australian dollar.

“We think the Australian dollar will come down and will come down hard,” Druckenmiller said today at the Sohn Investment Conference in New York. “It's expensive.”

The Australian and New Zealand dollars have each surged 45 percent against the U.S. dollar since the end of 2008, the biggest advances among over 150 currencies tracked by Bloomberg.

The Reserve Bank of Australia cut its benchmark interest rate to a record May 7, driving down a currency that has damaged manufacturing and boosted unemployment. Governor Glenn Stevens reduced the overnight cash-rate target by a quarter percentage point to 2.75 percent, saying in a statement that the Aussie’s strength “is unusual given the decline in export prices and interest rates.”

Australia joins global counterparts in embracing record-low rates in an economy where inflation is contained, mining spending is predicted to crest, and credit growth remains subdued. Stevens is aiming to rebalance growth as mining regions in the north and west thrive and manufacturers in the south and east struggle.

The Australian dollar fell for a third day, declining 0.2 percent to $1.0170 at 5 p.m. in New York, after reaching a two-month low the previous day.

Record Rates

Druckenmiller said in August 2010 that he was closing his hedge fund, Duquesne Capital Management LLC, after being worn down by the stress of trying to maintain one of the best trading records in the industry while managing an “enormous amount of capital.”

The U.S., Europe and Japan have cut rates to a record to stimulate demand. Federal Reserve Chairman Ben S. Bernanke has kept the key U.S. rate near zero for more than four years, while European Central Bank President Mario Draghi said policy makers are ready to cut again after reducing its benchmark to a record low 0.5 percent last week.

The RBA cash rate’s previous low was 2.89 percent in January 1960, according to the central bank. Australia, which hasn’t recorded a current-account surplus since 1975, typically maintains higher benchmark interest rates than other developed economies in order to attract capital inflows to offset its current-account deficit.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net

To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net; Dave Liedtka at dliedtka@bloomberg.net

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