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Mr. Talley also suggested that clients use foreign currency contracts to hedge against the dollar's volatility.
And some managers had already sold some holdings and currency contracts.
These hedges, basically currency contracts, are designed to cushion auto exporters against the negative impact of a weaker dollar.
It trades options on 800 stocks, 13 indexes and 100 foreign currency contracts, which trade in pairs.
Worse still, orders are booked in dollars, but to cover local production costs shipyards buy forward currency contracts, transforming their obligations into won.
Late in 1994, Mr. de Kwiatkowski purchased foreign currency contracts worth approximately $6.5 billion, and lost an estimated $215 million a few months later.
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In essence, a historic rate rollover is the extension of a currency contract that, if otherwise settled, would result in a loss for a trader.
Especially in a country where the currency is volatile, you may want to buy a foreign currency contract that locks in your exchange rate, for your fixed local expenses, she said.
Christina Weisz, director of currency exchange company Currency Solutions, recommends taking out a future or forward currency contract to protect yourself against an appreciating euro while still being free to take advantage if the euro should weaken further, as looks more likely.
Some also include risk-management tools like stop orders that can be set off when a currency contract hits a designated point; this feature is especially helpful if that point is reached while the trader is asleep.
NEW YORK TIMES Regulators Sue Foreign-Currency Traders | The Commodity Futures Trading Commission is suing 11 firms it claims sold foreign-currency contracts without registering with the agency.
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