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European Pension Funds Risk Driving Sharp Dollar Sales, BNP Says

Senior citizens in Llandudno, Wales.

Photographer: Christopher Furlong/Getty Images

Takeaways

European pension funds have started to increase currency hedging and a continuation of this trend would amount to considerable US dollar selling, according to BNP Paribas SA strategists.

Looking at just the Netherlands and Denmark — which have among the largest private pension sectors in Europe — fund managers reduced their unhedged dollar exposure as a percentage of total assets to 20% in April, from 23% last year, according to analysis by the French bank. Cutting that back further to 15% would mean another $217 billion in US dollar selling, its strategists said.