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Foreign shares currency risk


Guest Commodityplays

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Guest Commodityplays

Hi,

 

If you are shorting a foreign share in the US or Canada, please can someone let me know how I account for currency risk? Let's use a rough example of a share valued at 10,000, shorting for £1 a point. Say GBP/CAD is 1.33 now & it goes to 1.5 or 1.2 for example. If the contract is March 2020, there is obviously some pretty large currency risk involved. IG allows one to purchase in GBP or the foreign currency, so does that help? If not, what is the most simple way to totally remove the currncy fluctuations in this period. Thanks for any help on this 🙂

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Currency risk which way? If you're betting £1 a point then there isn't really any currency risk between that trade and your base currency (i.e. the currency you will be settling the trade in). Your profit and lose will tick in GBP so GBPCAD isn't an issue. 

There would only be a currency risk (when referenced against your base currency of account) if you're trading the CFD which is denominated in USD or CAD currency - depending on the listing.

Only then would a GBPCAD / cable hedge be required. 

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