FX Hedging: When Should Treasurers Treat It Strategically?

By Rich Bond

Treasury and Risk’s article “FX Hedging: Reactionary or Insulating?asks, “To what degree should treasury teams adjust their currency hedging programs in response to market volatility?” I believe the article is a “must read” because its points are profound and potentially impactful.

Many companies do a great job of hedging FX risk and avoid millions in exchange losses. But as great as the hedging is, it is only a tactical activity. In the currently volatile environment, the C-Suite members are likely weighing the pros and cons of their hedging strategies.

CFOs are always looking for strategic input and ideas. Isn’t it time for corporate treasury to step up and analyze the market trends and how they could impact the unique cash needs and risk exposure of the corporation? Treasury can go beyond being mere tacticians and make strategic recommendations on currency realignments.

Let me know if you agree or disagree, or to what degree you are already providing strategic recommendations to your CFO. Email me at Richard.Bond@BondandCompany.com.

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