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Risk Management
Published  6 MIN READ

FX Hedging Strategies for 2021 and Beyond

As new processes and technologies are called upon to help businesses navigate turbulent waters post Covid-19, foreign exchange hedging strategies will need to change too. The latest survey from Kantox, in partnership with TMI, reveals the extent of what’s needed now.

In a world where business efficiency and effectiveness suddenly became essential survival skills rather than just cost-saving measures, traditional foreign exchange (FX) management strategies must develop, and fast. As a key finding of the 2020 FX Risk Management Survey, conducted by Kantox in collaboration with TMI, it shows the depth of the impact of the pandemic on commercial activities. Indeed, says Antonio (Toni) Rami, Chief Growth Officer and Co-founder at Kantox, “it confirms that the life of the treasurer is becoming more difficult, and a lot faster than ever expected”.

The survey, conducted from June to July 2020, evaluated the effect of Covid-19 on FX risk management processes and policies among various industries, including manufacturing, retail, financial services, hospitality, and health care, and representing a revenue spectrum from firms in the under €20m bracket, to those over €1bn-€10bn from which most respondents were drawn.

The results indicate that even with a robust FX risk approach, the pace at which the world is changing means that no business is immune from market volatility. As such, a clear trend that can be observed among the 154 respondents is that FX strategies that were once considered sound must now be reviewed for post Covid-19 survival, and the call for more and better technology to help with optimisation is growing louder.