Standard & Poor's (S&P) has warned investors to keep hedging against falls in the US dollar as some scenarios see the greenback falling by as much as 30 per cent more.
In a new report by the ratings service, while Australian investors have benefited from hedging against currency fluctuations the Australian dollar has risen by around 15 per cent against the US dollar in the last12 months, investors are not out of the woods yet.
Investors should take a cautious approach to currency hedging, S&P director of investment consulting Simon Ibbetson said.
"They should focus on the fact that global current account imbalances still imply risks to the global economy with unpredictable consequences," he said.
"Preserving wealth may be the order of the day."
Ibbetson said measures of the Australian dollar's value, such as purchasing power parity (PPP) suggests that the dollar continues to trade at a discount to its implied PPP value.
