Dynamic Currency Management Advantages

Global Asset Management Corp. (GAMC) is a large investment firm that manages a multi-currency portfolio for its international clients. Recently, GAMC noted increasing volatility in the foreign exchange markets, particularly for the Japanese yen (JPY) and the euro (EUR). As part of their strategy to protect the portfolio from adverse currency movements, the firm's portfolio manager is analyzing whether to implement a dynamic currency management approach.

This approach would involve actively adjusting the currency exposure based on market conditions rather than maintaining a fixed allocation. The manager is considering the potential benefits and risks of this dynamic strategy versus a more static currency allocation approach that maintains a pre-determined currency allocation based on historical correlations.

What is the primary advantage of implementing a dynamic currency management strategy in this context?