Investors bearish on dollar, but cut hedges

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) - Professional investors are betting on a weak dollar but many have reduced dollar hedges as the U.S. currency has hit a series of record lows.

The dollar has plummeted against major currencies, particularly the euro, but participants at this week's Reuters Funds Summit in Luxembourg this week said it would remain weak.

"We have a long-term conviction that the dollar will be weak. This (has) helped us perform," said Eric Helderle, managing director of French fund firm Carmignac Gestion.

But with the dollar's latest falls, the degree of investment protection against further declines has been reduced.

"The movement of the dollar has been so strong these last days, so at some point we reduced the hedging but it is only tactical," Helderle said.

Since the beginning of the year the so-called dollar index .DXY, which tracks the dollar against a trade-weighted basket of six major currencies, has fallen 6.6 percent.

The euro has risen around 7.7 percent, boosted by the euro zone's higher interest rates and different expectations of the European Central Bank and U.S. Federal Reserve.

The dollar has also been battered over the past few years by the U.S. economy's large current account deficit, although that is now falling as the dollar weakens.  Continued...