Do you need to hedge currencies and don’t really have a good grasp on how to go about it? There are lots of good reasons to hedge currencies. Obviously, if you’re involved in any kind of importing or exporting business, you should think about hedging if your exposure in any one area is too great. There have been some pretty seismic currency shifts in recent years and if the Eurozone crisis is telling us anything, it’s telling us that there’s more turbulence ahead.
No-one really knows which way the chips will fall here. If they did, they’d be sipping a cocktail on a yacht in the West Indies, chatting with George Soros and Warren Buffett about where the world’s currencies are going next!
Hedging currencies may also be wise even if your business has no international trade exposure and buys and sells all its wares in the home country only.
Let me explain; imagine you’ve been merrily going about your business in the UK only – buying and selling just within that country for the last decade or so. The fact is that you’ve lost a lot of money in real terms versus the bulk of Europe which has been in the Euro or pegged to it just by virtue of the fact that sterling has weakened.
You may think this irrelevant but it’s not. Had you chosen to hedge 10 years ago by buying Euros with some of your sterling – and you now decided to unwind that hedge, you’d be quids in. Simply the opportunity cost of not hedging was, therefore, costly.
There are very easy ways to hedge. One that’s very easy is to take an online tutorial with sunbirdfx.com and maybe even to open a demo account to see what kind of trades and currency hedges are possible for your business.
The American dollar, sterling, the Euro, Japanese Yen, Canadian dollar, Australian dollar and the Swiss franc are all very readily and easily tradable and the website even shows you how to develop strategies to maximise or minimise your risk depending on your preferences.
This article was written by David, who fancies himself as a bit of a finance whiz. He often checks out sunbirdfx.com to keep up to date with the latest news.