Currency overlay


Currency overlay

Currency overlay is a financial trading strategy or method conducted by specialist firms who manage the currency exposures of large clients, typically institutions such as pension funds, endowments and corporate entities. Typically the institution will have a pre-existing exposure to foreign currencies, and will be seeking to;

  • limit the risk from adverse movements in exchange-rates, i.e. hedge; and
  • attempt to profit from tactical foreign-exchange views, i.e. speculate.

The currency overlay manager will conduct foreign-exchange hedging on their behalf, selectively placing and removing hedges to achieve the objectives of the client.

Many types of currency overlay accounts are more focused on the speculative aspect, i.e. profiting from currency movements. These so called 'pure alpha mandates' are set up to allow the manager as much scope as possible to take speculative positions. As such, they are similar in nature to foreign-exchange hedge funds in terms of objective and trading style.

References



Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Currency Overlay — The outsourcing of currency risk management to a specialist firm, known as the overlay manager. This is used in international investment portfolios to separate the management of currency risk from the asset allocation and security selection… …   Investment dictionary

  • currency overlay — noun The separation of currency risk outsourcing costs from asset allocation and security selection costs …   Wiktionary

  • Foreign exchange market — Forex redirects here. For the football club, see FC Forex Braşov. Foreign exchange Exchange rates Currency band Exchange rate Exchange rate regime Exchange rate flexibility Dollarization Fixed exchange rate Floating exchange rate Linked exchange… …   Wikipedia

  • COMA — Cache Only Memory Architecture (Computing » Hardware) * Children Of Mental Awareness (Medical » Hospitals) * Come Out Of My Ass (Miscellaneous » Funnies) * Currency Overlay Management Account (Business » International Business) …   Abbreviations dictionary

  • Iskandar Malaysia — Iskandar Malaysia, formerly known as Iskandar Development Region (IDR) and South Johor Economic Region (SJER) is the new main southern development corridor in Johor, Malaysia. The Iskandar Malaysia was established on 30 July 2006. It is named… …   Wikipedia

  • Steam (software) — Steampowered redirects here. For the steam engine, see Steam engine. Steam …   Wikipedia

  • Peer-to-peer — Not to be confused with point to point. This article is about peer to peer computing. For other uses, see Peer to peer (disambiguation). A peer to peer system of nodes without central infrastructure …   Wikipedia

  • Christopher Ironside — FSIA 1970, OBE 1971, FRBS 1977 (11 July 1913 – 13 July 1992) was an English painter and coin designer, particularly known for the reverse sides of the new British coins issued on decimalisation in 1971. He began his career as a painter, studying… …   Wikipedia

  • Lateinische Buchstaben in Unicode — Lateinische Buchstaben, also Schriftzeichen, die auf dem lateinischen Alphabet aufgebaut sind, sind in Unicode in derzeit 19 Blöcken enthalten. Die 26 Grundbuchstaben befinden sich – neben Ziffern, Satzzeichen und Steuerzeichen – im Unicode Block …   Deutsch Wikipedia

  • Tilde — For the baseball player known as the Big Tilde, see Magglio Ordóñez.  ◌̃ Tilde Punctuation …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.