An FI acts defensively as a hedger to reduce FX exposure if it engages in the purchase and sale of foreign currencies for hedging purposes to offset customer or FI exposure in any given currency.

Question

Quizplus · Accepted Answer

This statement is true. An FI can act defensively as a hedger by using foreign currency hedging techniques to reduce their exposure to FX risk. This can involve purchasing and selling foreign currencies to offset customer or FI exposure in a particular currency.

An FI Acts Defensively as a Hedger to Reduce FX