Currency exposure you didn't know you had

If you have foreign-currency liabilities, foreign assets, or upcoming foreign spending, you are running an FX position — whether or not you thought of it that way. Currency exposures hide in plain sight: a foreign sabbatical, a child studying abroad, dividend-paying foreign stocks, a holiday home, a remote employer paying in another currency.

Counter-intuitive rule: hedging is cheapest when your home currency is strong (the hedge buys at a high spot rate). It's most tempting when your home currency is weak — which is exactly when hedging is most expensive. Most households do it backwards.

Home currency strong

HEDGE · cheap

Home currency weak

wait if possible

Big foreign spend known

pre-buy gradually