I’m havng brain meltdown and I really should know this… when hedging currencies, what determines whether you take the short or long position in a forward contract?!
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if you are a UK exporter and sell goods in Germany, you would want to sell Euros forward to lock in the rate at which you can convert future Euro cash flows to Pounds.
if you are a UK importer and buy goods from Germany, you would want to long Euros forward to lock in the price you pay in Euros
In general, if you have an asset dominated in foreign currency, you should sell forward the foreign currency.
If you have a liability in foreign currency, you should buy…