Distinguishing Strategic vs Tactical Currency Management

In the context of currency management, firms often utilize two distinct approaches: strategic and tactical. Strategic currency management refers to a long-term approach whereby firms establish policies and practices to manage their currency exposure in line with their overall investment and operational strategies. Tactical currency management, on the other hand, is a short-term approach that focuses on capitalizing on market conditions and short-lived opportunities to improve returns or minimize losses.

Discuss the differences between strategic and tactical currency management, including examples of situations where each approach might be appropriate. Your response should highlight the implications of choosing one approach over the other for a company's overall risk management strategy.