nondollar

The two nondollar options are the mark-yen and the mark-pound.

"A short-term fund denominated in a nondollar currency is really nothing more than a foreign-exchange trading vehicle," Ms. Downey said.

Even when funds buy nondollar bonds, the currencies - Argentine peso, Thai baht - are often pegged to the dollar.

At first he hedged about 20 percent of his nondollar exposure and then moved up to 40 percent, buying option contracts lasting for six months to a year.

However, most banks tend to offer a miserable rate for any nondollar transaction so it can be better to use moneychangers, which are found in and around every major market.

Mr. Regan started hedging his nondollar exposure - which was mostly in European stocks - in February, when the dollar touched its record low against the mark.

Mr. Sargen and John Lipsky, a Salomon Brothers research director in London, recommended nondollar bond markets strongly in a report in mid-February.

On Monday, the Bank of Korea said it planned to diversify more of its reserves into nondollar assets, after years of holding too many low-yielding and depreciating U.S. government securities.