Currency strategists are responsible for researching and analyzing financial markets as well as macroeconomic factors in order to forecast exchange rates and currency movements. The majority of people in this position combine technical and fundamental analysis. Governments, financial institutions, international organizations, and private sector businesses with international operations are all possible employers.
For shorter-term currency fluctuations, a currency strategist may use technical and quantitative analysis, which is useful for currency trading. For longer-term forecasts, the strategist examines the macroeconomic environments and financial flows of two countries to determine the direction and expected range of exchange rates between the two currencies. Because government economic policy changes will affect both the value of the currency and exchange rates with some, or all, other currencies, it is also critical for a strategist to develop contacts with economists working in central banks in the relevant countries.
Such analysts frequently specialize in a single geographic region in order to gain a better understanding of the macroeconomic situation and factors that may influence future exchange rates. This is especially useful when dealing with a region of the world where financial markets are heavily regulated or illiquid. The currency strategist may rely on research from local governments, businesses, and international financial institutions if he or she lacks personal experience or knowledge of a region.
These strategists may help clients forecasting specific exchange rates to be used for investment or operations when working for a financial institution. Other responsibilities include forecasting the bank’s own investments and international operations. A financial institution employee may also write reports for clients or internal investment and trading units on a daily, weekly, monthly, or quarterly basis. Those with strong quantitative skills can create their own forecasting and trading programs for their companies.
Currency strategists in the government may work for a central bank, a trade department, or provide advice to elected officials and legislators. Analysis may aid in the formulation and implementation of a country’s trade policy, have an impact on central bank transactions, or become a topic of discussion in foreign policy discussions. A currency strategist is employed international and regional financial organizations such as the International Monetary Fund, World Bank, and Asian Development Bank.
A currency strategist in the private sector might work for a manufacturer or retailer that imports raw materials and finished goods from other countries. The strategist can assist his employer in securing favorable exchange rates for future business transactions, whether sourcing inputs or selling finished goods, understanding international macroeconomic and financial market behavior. Currency strategies may also allow a company to protect future international transactions from adverse currency market movements.
Analysts for financial television networks, newspapers, and magazines are also available. A currency strategist can provide high-level analysis of future currency trends as well as explain movements in international financial markets and foreign exchange markets. Some may start their own businesses and offer professional advice to companies and institutions that do not have their own advisers.