Multinational companies are beefing up their foreign exchange hedging strategies to guard their overseas earnings from larger currency swings that could come from a second Donald Trump presidency.
Trump’s election is introducing volatility into foreign-exchange markets as his victory clears the way for tariffs and protectionist trade policies that were the hallmark of his first term. At the same time, global central banks are trying to normalize interest-rate policy while balancing growth and inflation concerns, another potential source of volatility in the coming months.
Although the interest-rate differential between the U.S. and Mexico has tightened since the election, the cost of hedging long peso positions has increased because of the peso’s slide, said Paula Comings, head of foreign-exchange sales at US Bank .