How to hedge against currency risk?

One More Toy

Hello

I am going to receive a large-ish cheque in JPY Yen sometime next year

Say for arguments sake it's 1 million yen

I'd like to lock in the current exchange rate, what's the best way to do this? A cfd?

TIA
Omt

phantom_lord

1m in yen, or 1m yen. not worth it for the latter.

One More Toy

phantom_lord wrote: »

1m in yen, or 1m yen. not worth it for the latter.

1m yen roughly, fair enough

AlkalineAcid

I think you can short sell yen for euro today and repay your negative yen balance when you receive the yen. With IBKR you'll pay interest around 1.5% per year to borrow the yen which might be worth it your needs.

phantom_lord

AlkalineAcid wrote: »

I think you can short sell yen for euro today and repay your negative yen balance when you receive the yen. With IBKR you'll pay interest around 1.5% per year to borrow the yen which might be worth it your needs.

and $10 a month in account fees. Plus the commissions of the trade.

There's a good chance that hedging will cost more than the potential fx risk.

AlkalineAcid

phantom_lord wrote: »

and $10 a month in account fees. Plus the commissions of the trade.

There's a good chance that hedging will cost more than the potential fx risk.

The commission is only approx $2 but you're right, the monthly account fees will make the hedging a lot more expensive if OP doesn't already have an account.

One More Toy

Not currently with IB, happy enough with Degiro for now

Would a cfd work? Short the Yen?