Dow Jones Hedge Fund Investor Jen: 2013 'Not a Lucky Number' for Euro

Next year will be better for euro bears, says Stephen Jen, a longtime believer in the trade.

Mr. Jen, managing partner at hedge fund SLJ Macro Partners LLP in London, said his negative euro bets took a hit after the European Central Bank announced its bond-buying program in September.

The euro has traded near $1.30 since then, after falling close to $1.20 during the summer.

Mr. Jen said he believes the euro will resume its slide in 2013 as a faltering euro-zone economy, stung by fiscal tightening to fix the debt crisis, may push the ECB to resume cutting its key interest rate.

The year 2013 "will not be a lucky number for the euro," said Jen in an interview Thursday.

He declined to give specific forecast on how low the euro would decline during 2013. Earlier this year, he predicted the euro could tumble below $1.20 by the end of December.

Lowering the key rate from 0.75% will hurt the euro because it reduces the allure of euro-denominated assets as the interest rate premium over the Federal Reserve's key policy rate--currently between zero and 0.25%--shrinks.

Thursday afternoon the common currency was at $1.2960, down 0.8%, after ECB President Mario Draghi indicated in a press conference that members of the central bank had discussed a rate cut.

Mr. Jen said Mr. Draghi's comments Thursday signalled that "the ECB is getting close to pulling the trigger" on cutting interest rates.

As "inflation falls with growth, the ECB will eventually be compelled to ease through conventional means," or interest rate cuts, he said.

Mr. Jen said policymakers could welcome a decline in the currency if it happens in response to the weak economy, rather than over concerns about the debt crisis.

Meanwhile, Mr. Jen sticks to his dollar bull view against many emerging-market currencies including the Brazilian real and South African rand, both big losers against the dollar this year.

"The global economy will likely grow slightly above stall speed," said Mr. Jen. "This will not give enough cushion to protect some fragile economies, such as the commodity exporting emerging-market economies like Brazil, South Africa, Indonesia, Malaysia, and other Latin American countries."