Choosing Between Strategic and Tactical Currency Management

John is the Chief Financial Officer (CFO) of a multinational company that conducts business in Europe, Asia, and North America. This company is affected by exchange rate fluctuations due to its operations in multiple currencies. Recently, John attended a seminar where he learned about different approaches to manage currency risk.

During the seminar, the presenter discussed strategic currency management, which involves a long-term approach to hedging currency exposure based on anticipated moves in exchange rates. In contrast, tactical currency management emphasizes short-term decisions based on market conditions.

Given the company’s forecast of strong revenue growth in Europe and a potential strengthening of the Euro against the Dollar, which approach to currency management should John consider implementing to maximize potential gains from this anticipated movement?