Given the ongoing uncertainty around Brexit and the resulting currency fluctuations, it would be reasonable to expect that corporate focus on hedging has heightened – or at least remained consistent – over the last year or so, with an attendant rise in demand for forwards to mitigate FX risk.
However, conversations with brokers reveal a more nuanced market where forwards volumes are up at some firms and down at others, with corporates appearing to be willing to take their chances on currency movements.
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Carl Jani, Argentex |
Carl Jani, co-CEO of Argentex, which manages foreign exchange transactions for clients across EMEA, says that despite trading 28% more currency last year than in 2017, the percentage of that volume represented by forward contracts at his firm fell from 42% to 32% in 2018.
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