Hedging your dollar risks

Hedging your dollar risks

There are various risks attached to doing business and trading in currencies. Currency swings can and do have an impact on foreign investors over selected time periods.

In developed nations, when currencies are devalued, it is to encourage exports, because the prices of local products serve as an incentive and a toast for foreign buyers. However, that is not the position in Nigeria

Though the Nigerian capital market have become bearish ever since the nation went into recession. This market mood is stimulated by the on-going political activities, foreign exchange rates and the usual forthcoming “January effect”

History shows that the better-performing equities can vary from year-to-year and is difficult to predict. However amidst the obvious volatile stock market in Nigeria today, adventurous investors are seeking for how to hedge their portfolios and strategically position themselves in the market based on perceived implications of Trumps government on US dollar exchange rate.

The Pre and Post US election report reveals that Trump has consistently stated that he favors low interest rates, specifically for the purposes of weakening the dollar and making it cheap to service the U.S. debt pile. In fact, the new President Elect , Trump’s plan to enact a tax amnesty for the repatriation of U.S. corporate profits would have more chance of getting through a Republican house and would be a massive USD positive.

As we gradually draw to the close of markets for the year and project towards the coming year. We should expect to see surprising trade-weighted USD gains.

Written  by Infoware, a stock trading platform