Tuesday, March 18, 2014

When do I need to consider Currency Hedging

With all the income/profit coming as KRW and JPY, when do I need to consider currency hedging?

I couldn't find any rule of thumb to guide me.  I probably should not spend time and cost performing currency hedging when the currency exposure is less than SGD 100,000.

At the mean time, I should probably just performing a monthly conversion to SGD.

Korean Won (KRW)
For KRW, it is not so straight forward.  There is no direct conversion between KRW and SGD.  I have two options:
1) KRW.JPY, then SGD.JPY
2) KRW.USD, then USD.SGD

Since USD has a tighter spread, I should use the second option.

Japanese Yen (JPY)
For JPY, it is simple, there is a SGD.JPY for conversion.

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