
204 INTERNATIONAL FINANCIAL MANAGEMENT
physical delivery of the underlying currency. Speculators thus get into futures contracts to
profit from changes in exchange rates, and in the process, they face currency risk which may
ultimately result in a loss.
Speculators may be day traders who try to cash in on price movements during a single
day, or they may be position traders who maintain their futures positions for longer periods
of time, for weeks or months. Speculators sell what they think is overpriced and buy what
theythink is underpriced.Dependingontheirjudgement,speculatorstakeshortorlong
positions in futures, and carry them in ...