EM FX hedges and carry

asked by u/freshforexteam1875 · 1d · 1 answers

For those active in EM FX, how do you typically balance the cost of hedging downside risk against the potential for higher carry, especially in volatile periods like we're seeing in some LatAm currencies? I'm still trying to get my head around efficient risk-adjusted carry strategies.

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u/kevin76· 1 pts· 1d
That's a great question, and definitely a key challenge in EM. I've found that using options to create asymmetric hedges, rather than outright forwards, can be more capital-efficient for protecting against tail risk while still capturing some carry. It's not perfect, but it helps manage the cost.

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