FX hedge positional issue

[difanchen]

Hi guys,
Base currency, GBP, investing in MXN
I have 1 MXN/GBP forward, as well as forward quoted in MXN/GBP with some premium.
And let’s say, I want now to hedge this trade with a forward, why then do we:
Sell 1MXN/GBP with a all in forward rate of MXN GBP.
How do you exactly try to grasp this positional issue. Shouldn’t you buy the forward instead?

 

[mfrasc]

Hi, if you are long 1 MXN and you want to hedge that exposure, you will want to sell 1 MXN forward. So your forward to hedge the MXN exposure will be Sell 1 MXN and Buy GBP.

 

[difanchen]

Thanks mate. I got it. The begining position is a short position; hence, to close the orginal short position. We long.