Hedge (Currency) - Explained
What is a Currency Hedge?
Written by Jason Gordon
Updated at March 29th, 2023
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What is a Currency Hedge?
Currency hedging is similar to insurance, which you buy to protect yourself from an unforeseen event. Currency hedging is an attempt to reduce the effects of currency fluctuations on investment performance.
To hedge an investment, investment managers will set up a related currency investment designed to offset changes in the value of the Canadian dollar. In general, currency hedging reduces the increase or decrease in the value of an investment due to changes in the exchange rate. In other words, it aims to even out results.
Back to: ECONOMIC ANALYSIS & MONETARY POLICY
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