To Hedge or not to Hedge? | News & Insights | Validus Risk Management

To Hedge or not to Hedge?

09 December 2025

Canadian investors have always had one big question: how do you manage US dollar exposure when the currency keeps moving in ways that are hard to predict?

This white paper breaks down the USD/CAD story from the early days of the Canadian dollar to the modern FX market. What becomes clear is that hedging isn’t just a yes-or-no choice. It works best when you follow a simple, structured approach.

The goal of this white paper is to give Canadian investors a clear and practical way to think about their US dollar exposure. Instead of guessing, the report helps answer three straightforward questions

  • When should you hedge?
  • How should you hedge?
  • How much should you hedge?

What’s inside the white paper

  • Birth of a currency
  • Anatomy of USDCAD post-Bretton Woods (1971–2025)
  • Cross-sectional analysis of prices
  • Cross-sectional analysis of correlation
  • Effects of monetary policy
  • The hedging strategy
  • Recommendations

Author

Kambiz Kazemi, Chief Investment Officer

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