Natural hedge

Natural hedge — an offsetting exposure you hold as a byproduct of your situation, rather than a hedging product you buy. The course’s case: a Filipino with peso costs, USD agency revenue, and a USD-denominated goal holds unhedged USD assets — when the peso weakens (its ~2–3%/yr structural drift), the portfolio’s peso value rises against peso costs. Felix’s consumption-currency framework, inverted for a structurally-depreciating home currency: the unhedged position IS the hedge.

First used in: 5.3 · The S&P leverage point and the barbell