NakedPuts00

thommo77 Wrote:
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> The U.S. currency should (if IRP holds) appreciate
> by 0.7%. In this case, the U.S. currency only
> appreciates by 0.4% so if you hedge you do better
> than not hedging.
>
> If the U.S currency appreciated by 1.5%, you would
> be better to do nothing (i.e., not hedge).
>
> That is why you hedge, to remove the volatility in
> the currency markets that screw with your returns
> when investing internationally.

If assets are in US dollars why would I hedge and settle for 0.4% appreciation if based on IRP I expect it to appreciate 0.7%. So how is hedging better?