Borrowing and Depositing Foreign Currency

One fo the most obvious ways of dealing with foreign currency is with regard to simply borrowing and depositing.

Here then you borrow in that currency and convert it into your own currency and deposit it, and then you can change it back at the future specified date.

Obviously the problem that occurs with borrowing and doing this method is that it does give a definite exposure to that foreign currency, and that will remain if the receipts of investment don't come for whatever reason.

In other words, you still have to repay the borrowing in the foreign currency at the relevant time, and if you don't get the proceeds you were expecting to come through for whatever reason then you have to purchase that foreign currency to do so.

However if everything goes through fine as it will in a large number of cases then this is a sound position to adopt.

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