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What Does a Currency Strategist Do?

By Naomi Smith
Updated Mar 03, 2024
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The job duties of a currency strategist include researching and analyzing financial markets and macroeconomic factors to forecast exchange rates and currency movements. Most people in this position utilize a combination of technical and fundamental analysis. They may work for governments, financial institutions, international organizations, or private sector businesses with international operations.

A currency strategist may use technical and quantitative analysis for shorter-term currency fluctuations, which is useful for currency trading. For longer-term exchange rate forecasts, the strategist analyzes the comparative macroeconomic environments and financial flows between two countries to determine both 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 in central banks in the relevant countries, because government economic policy changes will affect both the value of the currency and exchange rates with some, or all, other currencies.

Often, such analysts specialize in one region of the world, in order to better understand the macroeconomic situation and factors which can affect future exchange rates. This is particularly useful when doing business with an area of the world with heavily regulated or illiquid financial markets. Without personal experience or knowledge of a region, the currency strategist may use research from local governments, businesses, and international financial institutions.

When working for a financial institution, these strategists may assist clients by forecasting specific exchange rates to be used for investment or operations. 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 reports on a daily, weekly, monthly, or quarterly basis for clients or internal investment and trading units. Those with strong quantitative skills may develop proprietary forecast and trading programs for their institutions.

Government currency strategists may work for a central bank, trade department, or advise elected officials and legislators. Analysis may contribute to formulating and carrying out 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, World Bank, or the Asian Development bank also employ a currency strategist.

In the private sector, a currency strategist may work for a manufacturer or retailer that sources materials and finished goods from other countries. By understanding international macroeconomic and financial market behavior, the strategist can help his employer lock in advantageous exchange rates for future business transactions, whether sourcing inputs or selling finished goods. Additionally, currency strategies may allow a company to hedge against adverse movements in currency markets for future international transactions.

These analysts also work for financial television networks, newspapers, or magazines. A currency strategist can supply 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 consultation to businesses and institutions that do not employ their own advisers.

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