标题: Currency Cross hedge (Always Local vs X?) [打印本页] 作者: DoubleDip 时间: 2011-7-11 19:42 标题: Currency Cross hedge (Always Local vs X?)
I understand cross hedge as Local curency vs a currency similar to home currency, but can it be between a currency similar to the local currency, and a currency similar to the domestic currency? i.e. 2 completely different currencies?
A proxy hedge is always Domestic vs similar (e.g. Yen instead of Remimbi)?
Thanks作者: Chuckrox 时间: 2011-7-11 19:42
I am fairly confident I remember reading that you can have two completely separate currencies.
anyone 2nd this?作者: Unforseen 时间: 2011-7-11 19:42
By Local I mean the foreign currency. Domestic is the home currency. Metsaregr8 we're on the same page - I'm just keen to establish if there's a slightly wider definition to cross hedge.作者: skycfa 时间: 2011-7-11 19:42
So if you had a GBP local portfolio and you were a USD domestic fund manager.
A cross hedge would be to: Sell GBP and buy EUR, then to sell EUR and buy USD.
A proxy hedge would be to sell EUR and buy USD.
Is that right?作者: cityboy 时间: 2011-7-11 19:42
Cross hedge you are transferring the currency risk for where you are invested into another currency all together.
A Proxy hedge you are hedging your investment in a foreign market with a currency that is highly correlated with it because of lack of liquidity in the 1st market.
