Forex Investment and Currency Trading

Dynamic Hedging

• Many corporates have begun to adopt a “dynamic” hedge approach in which hedges are periodically assessed and adjustments made as deemed necessary
• During the time between when hedges are established and when they mature, the key inputs to the decision criteria may change, which in turn may alter which hedging strategy is deemed most appropriate
• This recent round of USD weakness has allowed US corporations to restructure their hedges to take advantage of more attractive levels and to improve their hedge profile

Capital Expenditure Hedging

• Since the inception of FAS 133, corporations have been challenged to find an effective hedging program that manages the FX risk associated with Capital Expenditures and at the same time satisfies the hedge accounting regulations
• Timing uncertainty related to actual cash flows can cause earnings noise or hedge ineffectiveness that is undesirable for US corporations