Managing currency risks with a sharp focus on exposure, impact, and liquidity.
Currency risks are inevitable. Managing them is a strategic decision. Together, we establish a resilient hedging policy, execute hedge ratios with precision, and adapt them dynamically to your evolving markets.
A good currency strategy doesn’t look at exchange rates in isolation. It integrates portfolio, risk, and execution – and thereby lays the foundation for well-reasoned decisions.
Currency management doesn’t begin with blanket hedging. We need to determine which currency risks should be accepted, limited, or precisely managed.
Investments in foreign currencies broaden the options for institutional investors but can significantly alter a portfolio’s performance, risk structure, and liquidity requirements – often more quickly than strategic allocations would suggest.
A sound currency strategy illustrates how exchange rates affect the portfolio, risk, and liquidity – and which risks should be deliberately managed.
We can accompany you at every stage, from analysis through implementation, with capital market expertise, an understanding of portfolio interrelationships, and experience throughout the entire process until your currency decisions take effect.
Learn more about the topics and perspectives of Metzler Capital Markets.
Capital Markets overviewSome questions require a second opinion. That’s why we don’t view currency management in isolation but rather as an interplay between research, risk overlay, and sales & trading.
An effective currency strategy begins before implementation. Using a Strategic FX Overlay, we work with you to develop a sound, strategic hedging policy that takes your core investments and currencies into account. Individual benchmark indices, risk appetite, regulatory requirements, and expected cash flows are all factored into the analysis. The result is a hedging policy that aligns with your strategic asset allocation and governance framework rather than focusing solely on exchange rates. If necessary, we supplement the strategic approach with tactical adjustments.
Using a Passive FX Overlay, we implement defined hedging ratios for existing foreign currency positions in order to achieve a centralized, transparent, and cost-efficient currency management – across different asset classes and portfolios. We leverage economies of scale and netting opportunities, bundle transactions, and execute them via a specialized trading desk.
Using an Active FX Overlay, we actively manage forex risks in accordance with established rules. We tactically adjust the hedging ratio to limit currency losses and capitalize on positive exchange rate movements. Decisions are made using a systematic process. This ensures discipline, transparency, and traceability – especially when exchange rates fluctuate sharply.
We bundle transactions, leverage netting opportunities, and implement hedges via a specialized trading desk.
Currency management requires clear processes, sound standards, and experience in implementation. We bring all of this to the table.
Every challenge is different. That’s why our conversations don’t start with a ready-made solution; instead, we take a close look at what you really need. Let’s work together to determine which currency strategy is the perfect fit for your portfolio.
