# selling a currency forward

lets use an example

i am in singapore and have a US portfolio. to hedge the currency risk, i sold the dollar forward.

as quoted in more examples i see, the usual way to pharse it is.

“iamthenight sold US dollar forward at 1.25SGD / USD.” note that the notation is in DC/FC

end of the day I have to sell my USD for SGD. CORRECT???

i can also hedge by this method of buying SGD forward.

“iamthenight bought the SGD forward at 1.25SGD / USD.” note also in DC/FC notation

end of the day i have to buy SGD at a fixed rate using USD. CORRECT???

now the question is, is this the standard notation, as long as i am trying to hedge the SGD against the foreign currency, the notation is always in DC/FC notation??? can it be in FC/DC notation???

the wording…“denominated in USD…” i forgot the context. but can anyone tell me what it is exactly???

losing my marbles…

Selling USD forward and buying SGD forward are the same thing. If you want to hedge selling dollars forward, you have to buy _ dollars _ forward.

As for the notation, the language usually refers to the denominator (as if it were a commodity): if the exchange rate is in USD/SGD, then they’ll say that you’re buying SGD or selling SGD.

The CFA curriculum uses the / to mean “per.”

So in the CFA books, 1.34 USD/EUR means 1.34 USD per 1.00 EUR, or 1.34 USD will buy you 1 EUR.

But in the market place, EUR/USD is the standard notation, and thus 1.34 EUR/USD actually means 1.34 USD per EUR. Basically, don’t look at it as being DC/FC or FC/DC because it will only confuse you, just assume the / means “per.”

Standard, but stupid.

Agreed, DC/FC or FC/DC is confusing and there are questions where they are the other way around so you can’t make assumptions.

The trick i use is that "/’ means over 1, so the denominator is 1 unit and the numerator is x units.

If it is listed as “:” then it is the numerator which is 1 unit and the denominator is x units.

Once i started looking at the questions like that it took away a tonne of confusion.

Hope this helps