Disliked
Now when we take a position, say long USD, we can short EUR/USD. As a hedge we can also short cable GBP/USD and long yen USD/JPY. In this way we are hedged but we are now managing three different currencies.Ignored
What will happen
A) cable moves less(in your way) then the movement of EU against you.
b) Cable moves faster(away from you getting longer) then EU (with you slowly)
c)Cable moves in opposite direction then EU.(it can happen EU and UJ are moving in same direction for last so many months which supposedly is that UJ should move against how EU moves.)
what i think personally at the end what it drills down is to
"Manage Risk a.ka $ Amount"
we have 5% (just a no) risk tolerance of our book now you can either spread that to multiple currencies or you focus on 1 currency...anything else hedge ...gamma ...beta..theta doesnt matter...
whats matter is how you manage this RISK
though i know FTI said something about options and i have looked on LEAPS on the currency markets and it has open some curiousity in my head...
Just putting my thoughts out there...
V