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Currency Position

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In finance, the existence of a debtor or creditor balance with which an investor counts for a given currency at a particular time is known as a currency position.

Through a market share by investing in a currency, a person (both physical and legal) can adopt a particular currency position based on their debtor or creditor situation.

The adoption of one position or another in reference to a currency will be influenced mainly by speculative reasons, since the decision on the part of the investor will be based on the expectations that exist or that he perceives on the future evolution of the value of the same.

This means that the investor individual chooses two different modalities with respect to the currency in which he begins to operate financially: either a short position or a long position.

Based on the search for benefits resulting from the purchase and sale of a currency, investors choose to move their portfolios in these assets taking into account the evolution of the values ​​of the different currencies. It plays an important role in market volatility.

Currency position types

Based on estimates of increase or decrease in the value of the currency in which it's invested:

- Short position in currencies, if the currency is expected to suffer a loss of value in the short and medium term
- Long position in currencies, if an increase in future value for the currency is planned

Adoption of simultaneous currency positions

It's important to note that contrary to what happens in markets of other types of financial assets, in the currency market it's usual to take short and long positions simultaneously.

This is explained by the fact that one currency is always sold or bought in terms of another. In other words, the sale of yen for example can be a consideration in dollars or euros. Therefore, an investor who sells yen for dollars in return will be relying more on the future value of the dollar against the yen.

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