Directly matching foreign asset and liability books in the same FX currency will allow an FI to hedge or lock in a profit spread regardless of future changes in exchange rates.

Question

Quizplus · Accepted Answer

By matching foreign asset and liability books in the same FX currency, an FI eliminates any exchange rate risk and is able to hedge or lock in a profit spread, even if exchange rates fluctuate in the future.

Directly Matching Foreign Asset and Liability Books in the Same