Bridgewater was among the originators of the currency overlay business, helping pension funds manage the currency risk of international equities. Our currency process is fundamental and systematic; we believe that a deep understanding of all elements of the balance of payments is essential to understanding and managing currency risk. Through understanding the fundamental determinants of exchange rate changes, we identify balance of payments imbalances that will require exchange rate adjustments and reposition portfolios into an attractive blend of currencies designed to improve returns and reduce risk. Bridgewater manages currency overlay on a variety of benchmarks, including fully hedged, unhedged, partially hedged and options hedged.