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By Saqib Iqbal Ahmed and Laura Matthews
New York (Reuters) – Corporate treasurers are increasing efforts to protect the company’s profits against more dollars (DX = F) Force, a decision that some analysts have declared that increased clues to increased conviction that President Donald Trump’s pricing plans will help maintain the American currency longer.
The US dollar index is around 7% above its stockings in September, hovering near a two-year summit in January while investors bought the expectations that it would benefit from growth solid American economic and Trump protectionist trade policies.
Speculators have in charge of bullish bets on currency, which increases the net position in dollars to $ 35 billion, the largest in almost nine years.
Corporate treasurers, which often use term contracts, currency options and exchanges to reduce the potential losses of currency fluctuations, generally move at a more supported rate. But they come more and more to the idea that the dollar can feed or dwell at these high levels for a while.
“The business community is slower to act and more deliberate,” said Paula, head of foreign exchange in Us Bank.
“(But) we have seen those who have a significant exposure from income abroad they need to repatriate, adding to these expected cash coverage programs,” she said.
“What we hear from customers is that they provide perseverance from the dollar,” said Coming.
File photo: US One Dollar ticket tickets are seen in front of the stock graph displayed in this taken illustration
Multinational companies like Apple (Aapl) and Microsoft (Msft) have already warned that Fort Dollar should put pressure on financial results in the coming months.
Although there is little visibility in the overall level of the business coverage activity, interviews with market players show the momentum to protect themselves against the additional force of force in dollars before the US elections of November and in anticipation of Trump’s potential victory.
“Before the elections, our research has shown that North American companies below $ 100 million has been very aware of the probability, as well as risks, a strong dollar after the nation went to the ballot box,” said Declared Eric Huttman, CEO of MillTechFX.
“Half of these small businesses said they were concerned about the impact of monetary value policy changes,” he said.
The vulnerability of foreign exchange markets on volatility appeared this week while threats of American prices against Mexico, Canada and China caused a dollar rally and triggered an increase in volatility.
Although the stronger dollar reflects the relative force of the American economy, it can pose a problem for certain companies. A strong American currency makes more expensive for multinational companies to convert foreign profits into dollars, while also harming the competitiveness of exporters’ products.
“We have seen a sharp increase in coverage activity in a wide range of industries, as companies have sought to protect themselves from the higher volatility environment and increased uncertainty since Trump’s electoral victory and the Fort of the dollar rally, “said Kyle Chapman, analyst of FX Market Analyst FX to the Ballinger group in London, said.
“FX is trained by ubiquitous titles even outside market circles, which draws the attention of treasurers to market fluctuations,” he said.
Underlying this increase in coverage activity is increasingly convinced that the dollar strength is there to stay for a while while Trump’s prices come into play.
“There is a general feeling that we have entered an environment in dollars stronger since the re -election of Trump … The scale and the rhythm of the rally since September have awakened people until the movements of FX On the results, “said Chapman.
Several companies have declared in recent weeks and projected a considerable negative impact due to market measures of unfavorable currencies.
Apple (Aapl) At the end of January, he warned that he expects the stronger dollar to shave 2.5 percentage points of his income in the current quarter, on the basis of one year on the other.
Johnson & Johnson (Jnj) also said that unfavorable foreign currencies have shaved on $ 1.7 billion, 2% of its 2024 sales, while Microsoft warned that its growth in revenues in the third quarter would be reached by 2 percentage points in reason for the stronger dollar.
Smaller and less sophisticated fx companies, which are often linked by thinner coverage budgets, a limited amount of capital that can be binded in hedges and a general lack of access to more advanced coverage programs with the Best prices, face a larger challenge from a dynamic male.
“The stronger dollar requires cash teams in small businesses to more carefully manage FX risks and implement solid coverage strategies to adapt to this new normal,” said Huttman de MillTechfx.
Amol Dhargalkar, managing partner of the risk management company Chatham Financial, said that in 2024, large companies contacted more than expected to review and update their coverage program due to concerns about the strength of the dollar, And it was not surprising to see the small businesses now make similar movements.
Although the securities linked to the prices have been able to cause a collection in the coverage activity, a greater escalation of trade tensions could undermine these efforts, because a total trade war can compromise the capacity of companies to provide for commercial activity and to Puting effective covers, analysts warned.
“For many companies, their underlying cash flows are threatened here … Some may have to realign their supply chains while some may have to face the income from lower customers in international locations”, said Karl Schamotta, chief market strategist with the Corpay payment company in Toronto.
“These are a lot of crossed currents and it is not only a linear increase in the volume of the coverage,” said Schamotta.
(Report by Saqib Iqbal Ahmed and Laura Matthews; edition by Lewis Krauskopf and Marguerita Choy)
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