How to deal with forex volitility when investing overseas?
Forex volitility is the amount of risk with the size of changes in forex rates. All trader expreience these volitilities when trading. How could I manage foreign exchange volatility whenever I invest in foreign stocks or, for that matter, stocks which are denominated in foreign currencies? How would this affect my returns?
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The most straightforward way to deal forex movements is to simple hedge your currency exposure. The second way is to invest in countries with stable currencies. The third way is to invest in a country whose currency is relatively undervalued, so you actually gain from foreign exchange rates when the currency appreciates.Foreign exchange volatility cannot be fully eliminated but it can be reduced and managed to suit your portfolio needs