What is Currency Hedging?
Currency hedging is a financial strategy used to reduce or eliminate the risk of losing money due to fluctuations in exchange rates. This strategy is particularly relevant for funds with investments across different countries with transactions in various currencies. The basic concept involves using financial instruments such as forward contracts, options, and futures to lock in exchange rates for the purchase or sale of currencies at a future date. By doing so, you can protect the value of your international investments against adverse currency movements.
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