Berkshire owned about $21.4 billion of foreign exchange contracts at year end, spread among 12 currencies. As I mentioned last year, holdings of this kind are a decided change for us. Before March 2002, neither Berkshire nor I had ever traded in currencies. But the evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come -- so since 2002 we’ve heeded that warning in setting our investment course.
I am a subscriber to the economic theory that higher imports are generally a good thing because it implies greater wealth among U.S. consumers, so Buffett's worries are perplexing. Buffett has proven to be a great investor when it comes to companies, but his macro currency bets and political expertise (judging from Arny's reactions to Warren's advice in the CA gubernatorial race) are dubious.
Still, Buffett seems to be in the black on his bet since he made it. According to Larry Kudlow, Warren's break-even point on the dollar is $1.22/euro; the euro currently trades at $1.26/euro.