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Natural hedge

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Natural hedge
A natural Hedge is the reduction in financial Risk that can arise from an Institution’s normal operating procedures. For instance, a company that has a significant portion of its sales in one country Will have a natural Hedge to at least part of its Currency risk if it also has operations in that country generating expenses in the Currency. Firms may act to increase natural hedges by changing sourcing, funding, or operational decisions, but natural hedges are less flexible, and more difficult to reverse, than financial hedges.
Posted by  Privatebanking.com
 
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