Trump's tariff threats have boosted demand for currency hedging

ChainCatcher news, according to the Financial Times, Trump's repeatedly changing tariff policies have pushed exchange rate volatility to multi-year highs and boosted demand for foreign exchange hedging products at a time when companies are struggling to adapt to market fluctuations.

According to JPMorgan's G7 and emerging markets exchange rate volatility index, exchange rate volatility has surged in recent days to levels seen during the collapse of Silicon Valley Bank and Credit Suisse in March 2023. Bank and multinational executives have stated that the uncertainty surrounding Trump's tariffs has created more demand for foreign exchange hedging products to offset the impact of sudden exchange rate fluctuations on global business operations.

Nathan Venkataraman Swamy, head of Asia-Pacific foreign exchange trading at Citigroup, stated that since Trump's election as U.S. president in November last year, demand for hedging products has accelerated due to uncertainty in U.S. trade policy. Swamy noted, "In February, trading activity in many parts of Asia slowed due to the Lunar New Year holiday, but trading volumes rebounded in March, with strong corporate hedging activity."