Volatility and leverage key for Euro importer
Background: A European company is an importer of US dollar-denominated products, making it a net seller of euro/dollar. The company is willing to take on leverage in order to improve its US dollar buying rate against the one-year forward. The client is also an importer of goods from Japan (seller of euro/yen), but has not traditionally hedged this exposure and has benefited from a strengthening of that currency pair in recent years.
Problem: Our view is that Asian currencies should continue to
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