Besides trading for a profit or yield, currency trading can be used to hedge a stock portfolio. If, for example, one builds a stock portfolio in a country where there is potential for the stock to increase value but there's downside risk in terms of the currency, for example in the U.S. in recent history, then a trader could own the stock portfolio and sell short the dollar against the Swiss franc or euro. In this way the portfolio value will increase and the negative effect of the declining dollar will be offset. This is true for those investors outside the U.S. who will eventually repatriate profits back to their own currencies . :D ;)
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