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Glossary

Navigate the complex world of currency management with our comprehensive dictionary of financial terms and definitions.

Cross-Hedging

Cross-hedging is a hedging technique that involves hedging an exposure in one currency with a forward contract denominated in a different, but correlated, currency. Examples of correlated currencies are EUR and CHF, USD and CAD, AUD and NZD, etc.. Cross hedging was very popular with investment portfolio managers when correlated currencies had markedly different interest rates. It is rarely performed in a systematic way by corporate hedgers.