Currency diversification

Currency diversification

Using more than one currency as an investing or financing strategy. Exposure to a diversified currency portfolio typically entails less exchange rate risk than if all the portfolio exposure were in a single foreign currency.

Currency Diversification

Any investment strategy that involves investing in securities denominated in several currencies. For example, one may buy stocks that trade in U.S. dollars, British pounds, Japanese yen, and euros. One conducts a currency diversification strategy to reduce the foreign exchange risk involved in trading with only one or two currencies.