Alexander James M Scott

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How do sovereign wealth funds use forex hedging strategies?

Sovereign wealth funds (SWFs) invest globally, requiring forex hedging to protect national savings. For example, Norway’s GPFG hedges to reduce NOK volatility against foreign assets. Institutions managing SWFs deploy long-term forward programs. Benefits: stability and predictability. Risks: large size can distort markets when hedges are adjusted. For traders, SWF flows illustrate how state-level actors shape forex beyond speculation. Sovereign hedging is about protecting generations, not short-term profits.