If you've attended a Monex event or webinar, you may know that we harp on the importance of developing and executing a tailored hedging policy to limit the risk of fx volatility on a firm's bottom line.
I find myself sounding like a broken record, honestly. But it is for a good reason as fx volatility, and unhedged exposure can put a company out of business.
You don’t have to take my word for it. This morning Kyriba released their latest Currency Impact Report that showed currency volatility cost American and European companies 12 billion dollars in losses in the first quarter of this year. The report details the impact of fx volatility on 1,200 multinational companies and shows a 37% jump in negative impact from the previous quarter as the greenback saw its most significant quarterly surge since 2016.
And while Q1 was unusually volatile, this event was not a flash in the pan. The increase in volatility marked the sixth time in seven quarters that the quantified negative currency impacts have been more than $10 billion dollars—except to see equally staggering numbers when the Q2 report is released as the dollar gave back all its gains and fell close to two-year lows.
Wolfgang Koester, senior strategy officer at Kyrbia, correctly states “Anybody who thinks that volatility is going to go away is probably in the significant minority at this point.” Most corporations are facing unprecedented challenges due to Covid-19 and cannot afford to lose revenue due to currency volatility. Please reach out to your Monex representative for help establishing a hedging strategy and cost-effectively implementing it by calling us (800) 834-2497 or request your account manager contact you.
