FX Liquidity Hedge

Rationale

Traditionally, currency exposure is hedged using swaps to remove the market risk. However, swaps can leave the client exposed to liquidity problems (collateral calls) when large adverse currency moves occur, as in 2008 when GBP, EUR and AUD all lost more than 30% over a period of just a few months.

The FX Liquidity Hedge is designed to protect clients - such as Corporates, Funds of Funds, and Pension Funds - against  this problem, while generating alpha at the same time.

Key Benefits

• Ensures liquidity is available when the client most needs it: when large adverse currency moves occur and during periods of global market stress
• Client maintains full control
• Creates opportunity for client to outperform in difficult market conditions, providing a competitive edge when attracting new allocations

Fusion FX Services Fact Sheet (pdf, 93k)

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