By Sophie Kiderlin
LONDON, Feb 26 (Reuters) - Nearly 90% of medium-sized North American and European companies are now hedging their currency exposure and about two out of three plan to keep those hedges for longer as market volatility and geopolitical uncertainty raise financial risks, a survey by software provider MillTechFX showed.
The poll of around 750 finance decision-makers at companies in North America, Europe and UK with market capitalisation of $50 million to $1 billion showed 88% now hedge
currency risks, up from 81% of companies a year earlier.
Among those that do not hedge, nearly two-thirds said they were considering doing so given the current market environment.
Market volatility has risen over the past year, driven largely by rapid shifts in U.S. trade and foreign policy under President Donald Trump's "America First" agenda. Those moves have prompted questions about the U.S. dollar's traditional safe-haven status. It has fallen nearly 11% against a basket of other major currencies since Trump's second term began in January 2025.
Companies and investors often use combinations of derivatives to shield themselves from swings in exchange rates, which can boost or erode the value of transactions, sales or holdings.
MillTechFX’s report showed 62% of respondents said they were being negatively affected by currency market volatility, with 25% going as far as pointing out a “very significant negative impact”. This jumps to 35% when looking only at corporates based in North America, the highest out of any region surveyed, and a further 69% reported a net negative impact.
The cost of hedging is also increasing, by a mean of 67%, according to the report.
“Corporates are reassessing how much FX risk they are willing to carry, balancing the impact of market uncertainty against rising hedging costs. Many are responding by extending hedge tenors to lock in greater certainty while maintaining flexibility through balanced hedge ratios,” Eric Huttman, CEO of MillTech, said.
Of the respondents, 62% said they were planning to extend hedge lengths, with only 11% saying they would shorten.
The survey also showed barriers to greater corporate hedging. In North America, 83% of those companies that do not currently hedge against currency risk cited burdensome hedging infrastructure, while 67% of those in Europe said they believed capital could be better allocated elsewhere.
(Reporting by Sophie Kiderlin; Editing by Amanda Cooper and Emelia Sithole-Matarise)
