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Being long one currency, is an implicit short against the rest whether one engages in fx/swaps/cfds/forwards on a pair or not.
by cinquemb 8y ago
Being long one currency, is an implicit short against the rest whether one engages in fx/swaps/cfds/forwards on a pair or not.
- fauigerzigerk 8y agoAbsolutely, but if an institution is taking some form of deposit in euros and promises to make predictable payments in euros then being long euros is not a directional bet for that institution. Of course the picture gets a little murkier once you start considering inflation caused by exchange rate fluctuations. But that is probably not the main concern in a large currency area with an independent central bank.
- cinquemb 8y agoWe must have different ideas of what fx fluctuations are, +/-500 bps over a decade sure… not +/-500bps on -30% decline line over a decade vs a major pair…