THE sudden change in the dollar’s fortunes has become a big talking point in the City as investors try to decide whether the US currency’s recovery is an important turning point or merely a blip.

While the dollar’s surge threatens to make breaks to Las Vegas or New York more expensive this year, it could throw up opportunities for private investors willing to reshuffle their portfolios. And if you want a second home, this could be the time to buy an American property.

Last week the dollar hit a seven-month high against the pound and the euro. This was contrary to the expectations of investment gurus such as Warren Buffett, who had been predicting the dollar would weaken this year.

On Friday the rate was $1.82 to the pound, compared with $1.92 at the start of the year — a climb of 5%.

Buffett has lost more than $300m (£164m) betting against the dollar this year. But even if you don’t have money in America, a rising dollar could have a big impact on your investments.

Britain’s largest companies in the FTSE 100 index derive about 30% of their profits from America and some pay dividends in dollars.

Even if you don’t invest in these companies directly your pension fund will almost certainly hold them. People with second homes in America are also directly affected.

Despite his losses Buffett is continuing to bet against the dollar. But many strategists, investors and traders think the greenback is in for a decent rise, at least for the next few months. Haydn Davies at Barclays Global Investors, a fund manager, said: “The dollar’s prospects have improved in the past few months and the rally can continue from here.”

Some investment companies that have been negative on the dollar have started buying it again.

Murray Gunn at Standard Life Investments said: “We’ve been dollar sellers over the past couple of years, but now we’ve changed our position.”

Spread betters made large amounts of money gambling that the dollar would fall last year. Cantor Index said its clients made £2.78m. But the tide has turned. David Buik at Cantor Index said: “Most punters are backing the dollar against a weak euro and yen.”

Betting that the dollar will rise against sterling is also popular.

Chartists, who look at graphs of past prices to predict where the market is heading, say the rally has further to go. Richard Lake at Brewin Dolphin, a stockbroker, thinks the pound will fall another 4% to $1.75.

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