New York (Reuters) – The Treasury Secretary is preparing the efforts to guard the company’s profits for more strength (DX = F) longer.
The US dollar index exceeds about 7 % of its lowest level in September, as it is coming near the passage of two years in January, when investors bought expectations that will benefit from the strong economic growth of the United States and Trump’s commercial policies.
The speculators have loaded the bilateral stakes on the currency, which pushed to the highest level of the long dollar to 35 billion dollars, the largest in nearly nine years.
Corporate bond secretaries, who use futures and currency options and their barters to reduce the possible losses of currency fluctuations, moves at a further pace. But they are increasingly wandering in the opinion that the dollar can run higher or still exists in these noble levels for a period of time.
“The Companies Community is slower and more deliberate,” Comings Paula, the head of foreign exchange sales at the American Bank.
She said: “(But) we have seen those who have a large revenue abroad that they need to return to the homeland, which adds to the hedge programs from this expected cash flow.”
“What we hear from customers is that they are planning to persevere the dollar,” Komings said.
File image: The United States of America sees banknotes in front of the graphic shown in this illustrated illustration
Multinational companies such as Apple (AAPL) and Microsoft (MSFT) have already warned of the strong dollar parking for pressure on financial results in the coming months.
While there is little clarity in the total level of corporate hedging activity, interviews with market participants show the motivation to protect from the additional power of the dollar that was operated before the US elections in November and expected to win Trump’s potential victory.
Eric Hutman said: “In the period before the elections, our research showed that North American companies are less than $ 100 million from the market were fully aware of a possibility, as well as the risks, with strong dollars after the nation went to the polls.” Milltechfx CEO.
He said: “Half of these smaller companies reported that they are concerned about the impact of policy changes on the values of the currency.”
The weakness of foreign currency markets for fluctuation came in the forefront this week, as the threats of American definitions against Mexico, Canada and China pushed a gathering on the dollar and raised an increase in fluctuations.
While the strongest dollar is a reflection of the relative power of the American economy, it can be a problem for some companies. The strong American currency converts multinationals to convert foreign profits into dollars, with competitiveness damage to exporters’ products.
“We have seen a strong rise in the hedging activity through a wide range of industries, as companies have sought to protect themselves from the high fluctuation environment and increase uncertainty since Trump’s victory in the elections and the mobilization of the strong dollar,” at the Bangerger Group in London, he said.
He said: “FX is driven by the headlines of newspapers that are everywhere even outside the market circles, and this attracts the attention of the treasury secretary to the fluctuations of the market.”
Supporting this hedging activity is an increasing conviction that the strength of the dollar is here to remain for a while with the start of the Trump tariff.
“There is a general feeling that we have entered a stronger environment in dollars since Trump’s re -election … The scale and the speed of the gathering since September have woke up to the impact of FX movements in the summary,” Chapman said. .
Several companies have been informed in recent weeks and expect a major negative impact due to the movements of the unsuccessful currency market.
Appl (AAPL) has warned in late January that it expects the strongest dollar to fly 2.5 points of its current revenue, throughout the year.
Johnson & Johnson (JNJ) also said that unwanted foreign currency movements were flying 1.7 billion dollars, or 2 % of its sales for 2024, while Microsoft warned the growth of its revenues in the third quarter by 2 percent due to the strongest dollar.
The smaller and least cleansing companies of FX, which are often bound by the smaller hedge budgets, and a limited amount of capital that they can connect to the hedges and general lack of access to the most advanced hedge programs with the best prices, face a greater challenge than a prosperous Back.
“The strongest dollar requires cabinet teams in the smaller fx risk management companies carefully and implement vocal hedge strategies to help adapt to this new natural,” said Hutman of Milltechfx.
In 2024, large companies have continued more than expected to review and update their hedge program due to concerns about the strength of the dollar, and it was not surprising now that the smaller companies see similar moves, the large companies have continued more than expected to review and update their hedge program due to concerns about the strength of the dollar, and it was not surprising now that the smaller companies see similar moves, the large companies, more than expected to review and update their hedging program due to concerns about the strength of the dollar, and it was not surprising now that the smaller companies see similar moves, said AM
While the main headlines related to tariffs may have prompted a reception in the hedging activity, a greater escalation of commercial tensions may undermine these efforts because the comprehensive trade war may expose companies’ ability to predict commercial activity and put effective hedges.
“For many companies, their basic cash flows are at risk here … some may have to reorganize their supply chains while some may have to deal with low customer revenues in international sites “. In Toronto.
“It is a lot of crossed currents and is not just a linear increase in the size of the hedge,” Shamota said.
(Participated in the reports of Iqbal Ahmed and Laura Matthews; edited by Luis Kraokopf and Margoreta Choi)
