Understanding Currency Management Approaches

In the context of currency management, two distinct approaches exist for handling foreign exchange exposure: strategic and tactical management. Strategic currency management generally involves a longer-term perspective, focused on the overall risk and return of a portfolio while establishing policies that aim to minimize currency risk over time. In contrast, tactical currency management involves short-term trades that capitalize on perceived market inefficiencies or trends. An investment manager is reviewing these approaches to decide which one to use in a dynamic and volatile currency market.

Which approach primarily focuses on market timing and seizing short-term opportunities?