Billion dollar bet on rate cut pays off

From the man that nearly broke Britain:

It may go down as one of the great currency bets in Australian dollar history  – a $US1 billion gamble on a Reserve Bank  rate cut that has delivered a $US19 million ($18.65m) profit in 36  hours.

The beneficiary, if you believe the rumour mill, is investment legend George  Soros.

Best of all, it appears the 82-year-old American pulled off the deal three  times, all with different foreign exchange brokers in Asia, for a tidy profit of  almost $US60 million.

‘‘Someone … seems to be betting on a rate cut,” said one Sydney-based FX  trader yesterday. “I’ve heard the George Soros rumour … a billion dollars  sounds like a lot, but it’s not enough to move the Australian dollar and it’s  not a lot for George Soros, but there is a play happening  in the FX  market. If it is him, it’s probably a bet on a rate cut. These days a billion  bucks can’t do much to the Aussie.’’

Soros sold out of gold investments late last year, sparking rumours that he  would again be active in global currency markets. According to reports out of  Japan, his investment company has made $US1 billion by shorting the yen between  November 2012 and February this year.

It has all proved to be fairly prescient.

At 2.30pm yesterday, the RBA cut the cash rate by a quarter of a basis point.  The Australian dollar plunged immediately to $1.0178 – giving the mystery  currency gambler out of Hong Kong a margin of nearly 2 US cents on every  dollar.

The profit, notched up in just 36 hours, topped $US19 million.

But it looks like the person behind it managed to pull off the deal three  times.

‘‘I’ve heard the $US1 billion in Hong Kong was just one order. It was also  done out of Singapore and a third foreign broker.’’

Full article: Billion dollar bet on rate cut pays off (The Sidney Morning Herald)

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