Andy Krieger: The 32-Year-Old Who Shorted More NZD Than Existed

In late October 1987, in the days after the Black Monday crash, 32-year-old Bankers Trust currency trader Andy Krieger built a short position in the New Zealand dollar that reportedly exceeded the country's entire M1 money supply. Using up to 400:1 leverage via currency options, he pushed the kiwi down approximately 5% in hours, generating roughly $300 million in profit for Bankers Trust. He received a $3 million bonus, considered it an insult, and quit to work for George Soros.

Andrew Krieger Born ~1955 · Former Bankers Trust currency trader · Author, The Money Bazaar (1992) Photo: PriceActionNinja

The Snapshot

Andrew Krieger is one of the most consequential currency traders of the 1980s and the subject of one of the most-cited single trades in foreign exchange history. Wharton graduate (with an unusual combined focus on Sanskrit and philosophy alongside his MBA work), he joined Salomon Brothers as a currency trader in the early 1980s, moved to Bankers Trust in 1986, and built a reputation as one of the most aggressive and innovative options-based currency traders on Wall Street. He was 32 years old when he executed the trade that would define his career and become a permanent reference point in textbooks on currency speculation. Earn2Trade

The trade itself: in the days immediately after the October 19, 1987 Black Monday crash, Krieger identified that the New Zealand dollar (the "kiwi") had appreciated against the U.S. dollar as global investors moved out of U.S. assets — but that the kiwi was fundamentally overvalued relative to New Zealand's small economy and limited monetary base. Using currency options with leverage as high as 400:1 and Bankers Trust's exceptional $700 million trading limit (versus a standard $50 million limit for other firm traders), Krieger built a short position that reportedly exceeded the entire M1 money supply of New Zealand. The kiwi fell approximately 5% in a matter of hours, generating roughly $300 million in profit for Bankers Trust. The Reserve Bank of New Zealand formally complained to Bankers Trust about the trade's size. Prof FX

For traders studying institutional currency methodology, Krieger represents the extreme end of asymmetric position-taking in modern FX. The trade combined three structurally rare elements: identification of a fundamental currency mispricing during a moment of broader market dislocation, the operational capability to deploy massive leverage through options rather than spot positions, and the willingness to take a position so large it could itself move the target market. The framework is essentially impossible for retail traders to replicate at scale, but the underlying principles — identify dislocations, use asymmetric instruments, size aggressively when conviction is high — generalize across the broader institutional macro canon we cover in our trader survey. Business & Leadership

Sanskrit to Salomon

Krieger's path into currency trading was unusual. He attended the University of Pennsylvania (the Wharton School) but pursued an academically eclectic course that included Sanskrit and philosophy alongside his business studies — an intellectual breadth that distinguished him from the more narrowly-finance-focused candidates that typically populated Wall Street trading desks of the era. The Sanskrit and philosophy training has been cited by Krieger himself as foundational to how he thought about markets: language structure, philosophical rigor, and abstract reasoning about complex systems all transferred into his currency analysis methodology. Orbex

After Wharton, Krieger joined Salomon Brothers as a currency trader in the early 1980s, where he developed his expertise in foreign exchange and currency options — the same Salomon FX desk that Bill Lipschutz was simultaneously building into a dominant force. The two traders' careers overlapped at Salomon during the firm's transformation into the leading currency operation on Wall Street. Krieger built his reputation at Salomon as an aggressive options-based trader before being recruited to Bankers Trust in 1986 with a substantially expanded trading mandate. Timothy Sykes

Bankers Trust and the $700M Trading Limit

The structural reason Krieger could execute the kiwi trade was Bankers Trust's exceptional treatment of his trading limit. When he joined the firm in 1986, the standard trading limit for individual Bankers Trust currency traders was approximately $50 million in position size. Krieger was given a $700 million trading limit — fourteen times the standard limit — based on his demonstrated track record at Salomon and the firm's strategic decision to bet heavily on his methodology. The expanded limit was effectively a structural bet by Bankers Trust that Krieger could deploy massive capital responsibly. Earn2Trade

The trading limit matters because it's what made the kiwi trade operationally possible. Most currency traders at competing firms couldn't have built a comparable position even if they had identified the same opportunity — the position limits would have prevented the trade from reaching the size needed to move the target market. Bankers Trust's $700 million limit gave Krieger access to a structural capability that essentially no other individual trader on Wall Street had. The combination of his analytical capability, his options expertise, and the firm's exceptional trading limit produced one of the cleanest examples in currency history of how individual trader edge can be amplified by institutional infrastructure. Forex Investors

The Post-Black-Monday Setup

On October 19, 1987 — "Black Monday" — the Dow Jones Industrial Average fell approximately 22% in a single day, the largest single-day percentage decline in U.S. stock market history. The crash produced a global flight from U.S. dollar-denominated assets, as international investors moved capital into other major currencies on the assumption that the U.S. dollar was structurally weakened by the equity collapse. The currencies that benefited most from the flight were the major reserve currencies (yen, deutschemark, swiss franc) and several second-tier currencies, including the New Zealand dollar. NLRBFCU

What Krieger identified — and what other traders missed — was that the kiwi's appreciation in the post-Black-Monday environment was fundamentally inconsistent with New Zealand's underlying economic conditions. New Zealand's economy was small, its monetary base was limited, and its central bank had neither the experience nor the capital reserves to defend the currency against a coordinated speculative attack. The kiwi had benefited from indiscriminate flight from the dollar rather than any positive fundamental view of New Zealand specifically. The mispricing was structural; the fundamentals justified a significantly lower kiwi-dollar exchange rate. The question was whether anyone could execute a position large enough to push the market back to the fundamental level. PriceActionNinja

The Kiwi Trade

Krieger built the short position through currency options rather than direct spot transactions, which allowed him to control billions in notional NZD exposure with relatively modest capital outlay. The leverage on the options positions reached as high as 400:1, meaning a relatively small capital commitment translated into massive market exposure when combined with Bankers Trust's $700 million trading limit. The total short position is estimated to have reportedly exceeded New Zealand's entire M1 money supply — meaning Krieger had built a derivatives-equivalent short position larger than the total stock of kiwi dollars in active circulation. Traders DNA

The market response was immediate and dramatic. As Krieger's selling pressure built — and as other speculators noticed the size of the position and began following the same trade — the NZD fell approximately 5% against the U.S. dollar within hours (some sources cite up to 10% over the following days). The Reserve Bank of New Zealand had limited tools to defend the currency: its options-market experience was minimal, its capital reserves were insufficient to absorb a coordinated speculative attack of this size, and its monetary policy tools were operationally too slow to respond in the time horizon Krieger was working in. The total profit for Bankers Trust from the trade is most commonly cited at approximately $300 million, though some sources have claimed higher figures up to $1 billion. Business & Leadership

The $3M Bonus and the Resignation

Bankers Trust's reward for Krieger's roughly $300 million profit was a $3 million year-end bonus — approximately 1% of the trade's gross profit. Krieger considered the bonus an insult; his framing was that producing 1% of the firm's annual profit through a single trade should have justified compensation closer to industry-standard hedge fund performance fees (which would have been 15-20% of the gain). His objection wasn't purely greed — it was that the bonus structure systematically transferred most of the value he created to Bankers Trust shareholders rather than rewarding the individual whose analysis produced the result. Earn2Trade

Krieger resigned from Bankers Trust in 1988 following the bonus dispute. The episode foreshadowed a broader structural shift in Wall Street compensation that would eventually produce the modern hedge fund industry — the migration of top traders from bank trading desks (where bonuses were structurally capped) to independent hedge funds (where performance fees could capture 15-20% of trading profits). Krieger's resignation was an early data point in that broader migration. The same year, Bankers Trust came under investigation for separate issues; regulators disclosed that the firm had overstated its currency options portfolio by approximately $80 million, contributing to the broader regulatory pressure that eventually forced Bankers Trust into its 1999 acquisition by Deutsche Bank. Earn2Trade

After Bankers Trust

After leaving Bankers Trust in 1988, Krieger joined George Soros's Quantum Fund — a structural complement, given Soros's reputation as the era's most consequential currency speculator. The Krieger-Soros partnership produced additional currency trades through the late 1980s, including positioning around the European Exchange Rate Mechanism dynamics that would eventually produce Soros's famous 1992 Black Wednesday trade against the British pound (an event covered in our separate Soros profile). Krieger's specific role in subsequent Quantum trades is less documented than the 1987 NZD trade, but his ongoing involvement in major macro positioning continued into the early 1990s. Forex Investors

In 1992, Krieger published The Money Bazaar: Inside the Trillion-Dollar World of Currency Trading — a book combining personal memoir with industry analysis of currency markets in the late 1980s and early 1990s. The book has remained one of the canonical reference texts on institutional currency trading from that era, though it has been less widely-read than the Schwager Market Wizards series that covered some of his peers. Since the early 1990s, Krieger has maintained a deliberately low public profile, focused on private investment activity and hedge fund advisory work rather than public commentary or institutional management. Forex Investors

What Traders Can Actually Learn From This

The first lesson from Krieger's career is the institutional capability premium. The kiwi trade worked at the scale it did because Bankers Trust gave Krieger a $700 million trading limit when standard limits were $50 million — a 14x institutional capability advantage. Most retail traders structurally cannot replicate this kind of position-size leverage even with identical analytical capability, which is part of why institutional and retail edges look different in modern markets. The lesson isn't to be discouraged by the gap; it's to recognize that retail edge has to come from different sources (faster decision-making, smaller-market opportunities, behavioral exploitation) rather than scale.

The second lesson is the value of options structure for asymmetric setups. Krieger used currency options rather than direct spot positions because the options structure allowed massive notional exposure with defined downside risk. The framework is essentially the same as Paulson's subprime trade — find an instrument where the maximum loss is defined and small while the maximum gain is undefined and large, then deploy enough capital to monetize the asymmetry. Retail traders can apply this principle (defined-risk options strategies, asymmetric event-driven setups) even when they can't apply the institutional position-sizing that amplified Krieger's specific trade.

The third lesson is the structural mismatch between value creation and institutional compensation. Krieger generated $300 million in profit for Bankers Trust and was paid 1% of the gain. The episode is the textbook case study of why top traders eventually migrate from bank trading desks to independent hedge funds — the compensation asymmetry favors the trader who can build their own firm and capture industry-standard performance fees rather than working under structurally capped bonuses. For traders thinking about career structure, Krieger's resignation is partial evidence that the right time to leave an institutional employer is often when your value creation is dramatically higher than your compensation can ever justify under the institutional model. Our broader trading education resources address career structure considerations.

Frequently Asked Questions

Disclosure: This article is editorial and contains no affiliate links. Trading involves substantial risk of loss. Andy Krieger's 1987 NZD trade profit figure of approximately $300 million is based on widely reported industry coverage; Bankers Trust internal trading records are not all publicly disclosed, and some sources have claimed higher figures. The specific market conditions of the 1987 Black Monday aftermath are not repeatable on demand, and modern markets have substantially deeper liquidity and stricter institutional risk controls than existed in 1987 — a position of comparable size would face significant operational obstacles today.