Asset quality trumps hedging cost in volatile currencies

Correlation of currency and underlying asset militates against hedging

market volatility

Underlying asset quality is a more important consideration than the cost of hedging foreign exchange risk when investors look to deploy cash in economies with volatile currencies, according to Jeffrey Yap, chief investment officer for Hong Kong-based hedge fund Ark One.

Yap was speaking at a panel discussion at the FX Invest Asia conference, held in Hong Kong yesterday, and was responding to a question on the merits of investors hedging out the forex risk for volatile currencies, such as the

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