The Uncertain Future of FX: CFOs Prepare for Election-Driven Market Volatility

As the 2024 US presidential election approaches, CFOs are bracing for potentially severe market volatility, with a whopping 86% planning to increase their currency hedging activity. This surge in hedging activity is a stark contrast to the 2020 election, when only 20% of CFOs planned to hedge their FX risk due to concerns about costs and complexity. The report reveals that the most hedged currency pair is USD/CAD, with 30% of respondents prioritizing it. The biggest FX-related concerns surrounding the election are policy changes, unpredictable market movements, increased volatility, and counterparty risk. The article highlights the importance of evaluating exposures, ensuring the efficiency of FX processes, and selecting the right banking partners and providers. The report also reveals that 93% of respondents believe the strong dollar will continue strengthening, leading to concerns about profit margin erosion and competitive disadvantage.As the election draws near, CFOs must carefully consider the potential risks and opportunities in the FX market. Will they choose to hedge their bets, or will they take on greater risks in pursuit of greater returns? The answer lies in a nuanced understanding of the market, combined with a willingness to adapt and evolve in response to changing conditions. As the US presidential election approaches, CFOs must carefully evaluate their FX hedging strategies, considering both the potential risks and opportunities. It is essential to balance risk management with opportunity seeking, and to remain agile in response to changing market conditions.