Interbank foreign exchange swaps trading has stagnated since 2022, as banks turn to the forwards market for their short-term liquidity needs, according to the Bank for International Settlements. FX swaps remain the largest segment of the FX market with average turnover of $4 trillion a day as of April 2025, a rise of 6% since […]
The largest counterparties for complex foreign exchange options are typically the leading multi-strategy and macro hedge funds that place big bets on the direction of currency pairs. But there is one corporate whose use of FX options is so extensive that it is connected to most of the top dealers on the Street, regularly buying
As hedge funds have ballooned in recent years, so has their footprint in the few markets large enough to accommodate them. This isn’t a problem when their trades are going well. When those trades backfire, though, it can be a different story – particularly if multiple funds are holding the same position and all try
As developed countries continue to rack up deficits, the big question looming over markets is, who will buy the growing pile of sovereign debt? Hossein Zaimi, global head of macro at Barclays, doesn’t have the answer, but he is pretty sure the prevailing view in financial and government circles is wrong. “The sustainability of the
Investors hope US rate cuts will lower FX hedging costs – FX Markets Skip to main content End of drawer navigation content European investors in US assets set to boost hedge ratios as implied yields rise As the US dollar has continued its fall after April’s tariff turmoil, foreign investors in US assets have had
Amid the ongoing US-China trade war this year, Chinese exporters chose to hold steady on their hedge ratios, according to dealers, owing to high hedging costs and expectations of a stable spot rate. Exporters accumulate US dollars from foreign sales, and many have held on to those dollars in anticipation of continued strengthening against the
Foreign exchange structurers are seeing increased demand from US corporates for options-based hedges that can limit losses on their net investment hedges caused by the US dollar’s selloff. While the economic value of derivatives hedges offsets changes in foreign assets, when those positions hit maturity companies can face hefty mark-to-market payments. Bank structurers, though, say
The deal contingent (DC) hedge market has been making a comeback, after President Trump’s chaotic tariff policies in April led to a sharp dropoff in public merger deal activity amid the widespread economic uncertainty. “The tariff discussions and news flow saw a lot of timelines pushed out, but I feel deals are coming back in
With FX volumes in Asia-Pacific (Apac) growing rapidly on the back of heightened volatility, HSBC is leveraging its regional and international footprint to broaden its FX offering, providing clients with robust solutions to meet their trading and hedging needs As worldwide trade disruptions have led to market volatility and uncertainty in Apac, market participants in
European asset managers and pension funds are adding more currency hedges to their US equity portfolios following a breakdown of the so-called ‘dollar smile’. The greenback typically appreciates when US stocks are booming or under extreme stress. For foreign investors, the phenomenon – known as the dollar smile – offers a natural hedge against sharp
US corporates are having a hard time responding to increased currency volatility as internal restrictions around hedging programmes make it difficult for them to react quickly to the shifting strength of the dollar. Heightened foreign exchange volatility, driven in particular by President Donald Trump’s chaotic tariff announcements, has seen the dollar weaken and made it
Since the start of Donald Trump’s second US presidency, many of his tariff-related social media posts have tended to appear late New York time. This piles extra pressure on the Asia trading session when G10 currencies are less liquid and creates risk management challenges for foreign exchange options market-makers. Barry McCarthy, head of FX derivatives
Dealers expect an increase in deal contingent foreign exchange hedging activity in 2025, in conjunction with heightened takeover deals from corporates and private equity firms in the latter part of the year. “We’ve certainly seen an uptick in deal contingent hedging,” says Edmund Carroll, head of FX, rates and commodities corporate client solutions at UBS.
Foreign exchange losses have begun to mount for some of the largest global corporates, with the likes of Amazon, Apple and Nike reporting revenues negatively affected by continued US dollar strength in the fourth quarter. Since September, the dollar has risen by as much as 7% against many G10 and emerging market currencies, reducing the
Corporates eye complex FX hedges as carry costs mount – FX Markets End of drawer navigation content Skip to main content Leveraged forwards and options-based structures entice treasurers facing rates uncertainty and FX volatility The shake-em-up economic policies trailed by new US president and so-called “disruptor-in-chief” Donald Trump have left corporate treasurers on both sides
Consultation papers are like tea leaves or runes: observers study them for clues to future actions or events. Such is the case with Iosco’s latest consultation paper on the controversial practice of pre-hedging. The document, released last November, has raised niggling concerns among market participants that the global standard-setter may be weighing tighter rules on
Does no-hedge strategy stack up for mag seven mavericks? – FX Markets End of drawer navigation content Skip to main content At Amazon, Meta and Tesla, the lack of FX hedging might raise eyebrows, but isn’t necessarily a losing technique The so-called magnificent seven – the seven largest US tech companies that famously make up
