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Old 09-11-2019, 04:23 PM   #1
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How do u hedge against currency risk in stocks

Let's say u invest in stock X in msia.

SGD/MYR currency is always changing.

How do u hedge against falling MYR (both equity and dividend)?
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Old Yesterday, 02:02 AM   #2
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Let's say u invest in stock X in msia.

SGD/MYR currency is always changing.

How do u hedge against falling MYR (both equity and dividend)?
So for regular investors like you or me, I'd say that you shouldn't worry about this. The cost of hedging your FX will generally be high enough that it's not worth it.

For professional investors or active traders, you've got a couple options, depending on the currency the stock is denominated in. If it's a liquid currency, there'll be an FX spot and/or futures market; you can just sell the FX and hedge back to your home currency.

Malaysia is not one of those markets. I don't think there's an active MYR FX futures market, and there's certainly not an active spot market (it's exchange-controlled).

If you've got a good relationship with your broker and you're not at some bucket shop, they might be able to offer you USD/MYR or SGD/MYR non-deliverable forwards to hedge the FX. That's not going to be cheap though.
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Old Yesterday, 11:10 AM   #3
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FX risk should form part of your risk assessment in your investing decision.

The company could be doing well locally but if the FCY is depreciating at a fast rate, then better avoid.

Somemore there are alot of regulatory risks with Msia stocks.

Maybe for short term trading is fine but long term?

DYODD.
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Old Yesterday, 05:06 PM   #4
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So for regular investors like you or me, I'd say that you shouldn't worry about this. The cost of hedging your FX will generally be high enough that it's not worth it.

For professional investors or active traders, you've got a couple options, depending on the currency the stock is denominated in. If it's a liquid currency, there'll be an FX spot and/or futures market; you can just sell the FX and hedge back to your home currency.

Malaysia is not one of those markets. I don't think there's an active MYR FX futures market, and there's certainly not an active spot market (it's exchange-controlled).

If you've got a good relationship with your broker and you're not at some bucket shop, they might be able to offer you USD/MYR or SGD/MYR non-deliverable forwards to hedge the FX. That's not going to be cheap though.
MYR is a controlled currency. Dont think any shop is going to offer you a swap for it.

Same as KRW, CNY and IDR
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Old Yesterday, 05:20 PM   #5
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MYR is a controlled currency. Dont think any shop is going to offer you a swap for it.

Same as KRW, CNY and IDR
The only way is to long FX (SGD/MYR)?
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