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A famous article many years ago was The Free Lunch in Currency Hedging by Andre Perold (1988). [http://www.hbs.edu/faculty/Pages/item.aspx?num=5305 ] It showed that while currency hedging does not change long term returns, it does reduce volatility. Thus, for a mean variance investor, it could be beneficial. This is because FX is not much correlated with ...


To answer this question, lets dive into some of the factors that generally determine foreign exchange rates. I've outlined the two of the most widely discussed factors below. Current account balance An economy's current account is a component of an economy's balance of payments and is a measure of the economy's financial transactions with the rest of the ...

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