Currency Management: An Introduction

Free CFA Level III: Private Markets lesson in Derivatives & Risk Management. 31 min read, ~4,699 words.

Domestic return; the approximation only holds when both returns are small. Forward hedge: sell foreign currency forward to lock in the domestic-currency value of foreign assets. Roll yield = (Forward - Spot) / Spot, positive when domestic rates exceed foreign rates, negative when they are lower. Hedging high-yield currencies carries...