Currency hedging in unpredictable times - MoneySense

Currency hedging in unpredictable times

Currency hedging gains in popularity as the volatile loonie takes markets for a ride.


Canadian investors have been on a wild ride the last few years, as the volatile loonie — is it up? Is it down? — rocks the value of their investments.

So naturally, investors are looking into currency hedging techniques to mitigate the risk. (Short-term investors should find such strategies especially useful, since they’re less prepared to ride out temporary trends that long-term investors needn’t worry so much about.)

The strategies get a little complicated. For example, take currency forwards, which allow investors to convert foreign currency exposure at the current exchange rate, even at a future date. A financial advisor is probably in order to illuminate some of them more fully, but follow the link for a concise rundown.