The current yield curve is lower is united states than in britain. It says it is unattractive for u.s investor to hedge currency risk on British assets whereas British investors should hedge currency risk on u.s investments. I thought it was other way around. If britain’s interest rates are higher then it’s currency will sell at frwd discount. So it will depreciate. Then shouldn’t the US investors holding assets in Britain hedge against depreciation of britain’s currency? I might be wrong. I don’t know. Can someone clarify? Thanks
Hedging has to come along with the manager’s expectation. Otherwise the manager is hedging with the expecation to earn the interest differential.