Currency exposure: you have it even if you never opened it
· beginner
Automated material · TradeAlmanac editorial deskDraft prepared by a language model from our stored data; not reviewed by an editor.
Many people assume currency exposure appears only when you buy currency. In fact it arrives earlier.
The hidden position
Exporters' shares depend on the exchange rate directly: their revenue is in foreign currency — Exporters and the exchange rate: who gains from a weak rouble. A portfolio of commodity companies is a currency position dressed as a rouble one.
The reverse holds too: domestic companies suffer when the rouble weakens, and a portfolio of them is a bet on its strength.
How to measure it
Not by the currency of the quote but by what the revenue of the portfolio's companies depends on. A rouble-quoted security with foreign-currency revenue is a foreign-currency asset.
Why it is worth knowing
Currency exposure should match the currency composition of your future spending rather than a forecast of the exchange rate. For someone whose spending is in roubles, a large currency position adds risk rather than removing it.
The instruments
Currency on the exchange, substitute bonds — Substitute bonds: foreign-currency income inside a rouble contour, funds holding foreign-currency assets — What is actually inside a fund, gold — Gold funds: how they differ from the metal.
Each has its own infrastructure profile, and that matters more than the yield — Restrictions and infrastructure risk: how it differs from market risk.
What not to do
Do not try to guess the exchange rate. The currency market is the most competitive and least predictable place there is; a bet on the rate without a need for the currency is speculation rather than protection.
Draft prepared by a language model from our stored data; not reviewed by an editor.
Model: claude-opus-5
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