Hedging a short euro/dollar position
Background: European exporters that are short euros, due to the nature of their business, continue to face the relentless appreciation of euro against the US dollar. They now have to weigh the benefits of hedging their short euro position at historical highs versus keeping their position unhedged in the hope that the weak US dollar trend will soon revert.
In the likely event that they decide to hedge at least part of their exposure, they will be looking at optimising the protection level. In
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