NEW YORK - U.S. corporations are turning to foreign exchange options again to protect their cash flow as they fear the U.S. presidential election and diverging central bank interest-rate policies could spark a period of currency volatility, bankers said.
Options grant the right to buy or sell currencies at a predetermined rate, allowing companies to soften the impact of currency moves by locking in a worst-case exchange rate. They can still benefit if the currency rebounds. Democratic presidential nominee Vice President Kamala Harris' plan for housing assistance and curbing price gouging could have mixed effects on inflation, the Tax Policy Center has said.U.S. corporate executives are talking much more about the election on earnings calls than in 2020, often citing tariffs and trade as issues, Reuters reported.
On Friday, Federal Reserve Chair Jerome Powell said it was time to cut rates, but investors said it remains unclear how far the U.S. central bank will go.