Currency Management: An Introduction

Free CFA Level III: Private Markets lesson in Derivatives & Risk Management. 32 min read, ~4,815 words.

Domestic return = approximately foreign asset return + currency return; precisely: (1 + RFC) x (1 + RFX) - 1. Forward hedge: sell foreign currency forward to lock in the domestic-currency value of foreign assets. Roll yield = forward rate minus spot rate, positive when domestic rates exceed foreign rates...