The Right Way to Approach Foreign Currency Net Investment Hedging…
Net investment hedging is an area that is often neglected and misunderstood. Yet ignoring the FX risk in your foreign operations can result in significant losses in shareholder value.
Any investment manager will tell you that when allocating investment capital to foreign assets, FX risk has to be managed just as importantly as any other risk.
So why is there so much variation in practice when it comes to corporations hedging the FX risk in their foreign interests? The following are some of the reasons why.