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Currency Hedge

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Currency hedge
Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks).

Currency Hedge
In equities, the act of holding a position in a stock denominated in a foreign currency while holding an equal but opposite position in the currency itself. This protects the investor from fluctuations in the value of a currency adversely affecting the stock holdings.


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With this increase in number, you, the average trader, are able to launch your own spot currency hedge fund with ease and you can avoid the mounting costs and the large amount of red tape and regulatory misunderstanding that often can with it.
Similarly, for US dollar thinkers the fact is that the dirham will not weaken against the dollar providing a significant currency hedge.
As such, the payable and foreign currency hedge will be treated as a single integrated transaction, with gains or losses on the hedge treated as adjustments to the payable, avoiding the risk of adverse character and timing mismatches.
 
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