Amount to hedge if borrow in EUR to buy USD assets?

Discussion in 'Risk Management' started by helpme_please, Jan 12, 2020.

  1. A trader borrows EUR1m to buy USD stocks. He wants to hedge away the currency risk through EURUSD futures. To do this, he goes long EURUSD to hedge this risk. The question is how much of EURUSD futures should he buy to hedge this risk accurately? The intuitive answer is to long EUR1m worth of EURUSD. Did I miss out anything? Thank you.
  2. wave