Investment seer takes fall in tumultuous market

February 26, 1994|By New York Times News Service

WASHINGTON — LONDON -- With world financial markets roiled by developments including a rise in American interest rates and the breakdown of trade talks between Washington and Tokyo, some of the world's biggest and savviest investors have been knocked down a notch or two. Among them is one of the biggest and savviest of all, financier George Soros.

Mr. Soros, 63, known as an investment seer for his successful bets on currencies, gold and real estate, suffered a $600 million loss Feb. 14, the first full day of trading after trade talks between the United States and Japan collapsed. His mistake was that he bet the wrong way on the direction of the Japanese yen's value relative to the dollar, his spokesman said yesterday.

Mr. Soros previously had basked in the positive glow of financial victory a year and a half ago when he bet correctly on a big fall in the British pound and stunned the currency markets with a $1 billion profit.

The loss erased nearly 5 percent of the $12 billion of assets held by Mr. Soros' Quantum Group, an in tensely private collection of investment funds that are registered overseas and are closed to U.S. individuals and institutions.

Mr. Soros' opinions have been so respected that his predictions about currency movements have become self-fulfilling in several instances, even though he devotes most of his time to running his charitable foundation. Much of the responsibility for strategy and day-to-day trading is in the hands of Stanley Druckenmiller, Mr. Soros's No. 2 man.

It was in an interview with the Times of London, published Thursday, that Mr. Druckenmiller first confirmed the $600 million loss that had been rumored. Mr. Druckenmiller and the Soros organization said they decided to talk about the loss because the amounts mentioned in rumors had varied widely.

Mr. Soros has been trading recently on a belief that the yen would continue to fall in value against the dollar. But then he was caught unexpectedly in the fallout from the breakdown of trade talks between Japan and the United States Feb. 11.

When markets reopened the following Monday, the yen, which had been falling, suddenly surged as traders concluded that the United States would seek to push up the yen as a way to narrow the American trade deficit with Japan.

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