Currency strategists research and analyze financial markets and macroeconomic factors to forecast exchange rates and currency movements. They use technical and fundamental analysis and may work for governments, financial institutions, international organizations, or private sector companies. They specialize in one region of the world and can help clients predict specific exchange rates for investments or transactions. They also work for financial television networks, newspapers, or magazines.
A currency strategist’s job duties include researching and analyzing financial markets and macroeconomic factors to forecasting exchange rates and currency movements. Most people in this position use a combination of technical and fundamental analysis. They may work for governments, financial institutions, international organizations or private sector companies with international operations.
A currency strategist can use both technical and quantitative analysis for short-term currency fluctuations, which is useful for currency trading. For long-term exchange rate forecasts, the strategist analyzes comparative macroeconomic environments and financial flows between two countries to determine the direction and expected range of exchange rates between the two relevant currencies. It is also important for a strategist to develop contacts with economists working at central banks in the relevant countries, because changes in government economic policy will affect currency values and exchange rates with some or all other currencies.
Often these analysts specialize in one region of the world in order to better understand the macroeconomic situation and the factors that may affect future exchange rates. This is particularly useful when doing business in an area of the world with highly regulated or illiquid financial markets. With no experience or personal knowledge of a region, the currency strategist can use research from local governments, companies and international financial institutions.
When working for a financial institution, these strategists can help clients by predicting specific exchange rates to use for investments or transactions. Other job duties typically involve making forecasts for the bank’s own investments and international operations. An individual working for a financial institution may also write daily, weekly, monthly or quarterly reports for clients or internal trading and investment units. Those with strong quantitative skills can develop proprietary forecasting and trading programs for their institutions.
Government currency strategists may work for a central bank, commercial department, or advise elected officials and legislators. The analysis can contribute to the formulation and execution of the country’s trade policy, affect central bank transactions, or become an issue for foreign policy discussions. International and regional financial organizations such as the International Monetary Fund, the World Bank or the Asian Development Bank also employ a currency strategist.
In the private sector, a currency strategist might work for a manufacturer or retailer that sources materials and finished goods from other countries. By understanding the international behavior of the macroeconomic and financial market, the strategist can help his employer to obtain advantageous exchange rates for future commercial transactions, whether in the purchase of inputs or in the sale of finished products. In addition, currency strategies can allow a company to hedge against adverse movements in currency markets for future cross-border transactions.
These analysts also work for financial television networks, newspapers or magazines. A currency strategist can provide high-level commentary on future currency trends or explain movements in international financial markets as well as foreign exchange markets. Some may form their own companies and provide professional advice to companies and institutions that do not employ their own consultants.
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