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FX hedging strategy has become a growing concern for corporates as volatility in currency markets intensifies. From dollar weakness to shifting central bank policies, treasurers are under pressure to rethink how and when they hedge—and whether their current approach is flexible enough for today’s unpredictable environment.
A recent article by Risk.net highlighted how rigid internal policies are making it harder for treasurers to respond quickly to dollar weakness and shifting global conditions. Vedanta Hedging CEO Abhishek Sachdev was among the industry experts quoted, emphasising the need for more agile approaches.
Please see article here: Corporates hamstrung in response to FX volatility – Risk.net
In this article, we explore the structural reasons why many corporates have struggled to respond quickly. We also outline some of the steps corporates can take to improve agility in their FX risk management programmes.
Unlike hedge funds or institutional investors, most corporates are bound by board-approved treasury policies that define how and when FX hedges can be put in place. This often leads to a lack of flexibility, particularly when markets move quickly.
“It is difficult for corporates to react in an agile way if they have an inflexible hedging policy.”
– Abhishek Sachdev, CEO, Vedanta Hedging
In many cases, these policies are shaped by historical experience—such as using only simple forward contracts—and can make it harder to explore more dynamic or sophisticated approaches to hedging. Even experienced treasurers may default to what they’ve “always done.”
One of the more notable shifts in hedging strategy over the past year is the move away from longer-term hedges. Previously, many corporates favoured 12–15 month forwards. Now, however, there’s a clear trend toward rolling three-month hedges.
This shift reflects greater near-term uncertainty, as well as an attempt to better manage risk in a fast-changing environment. Rolling hedges also give corporates more opportunity to reassess positions and respond to central bank actions or macroeconomic changes.
Higher FX volatility has made traditional options-based protection more expensive, which can act as a further barrier to quick decision-making—particularly when internal processes delay execution. This reinforces the need for streamlined decision-making frameworks and better data visibility to support proactive risk management.
Several banks and treasury platforms are increasingly focusing on automation, with tools that help treasurers forecast cashflows and assess hedge requirements more dynamically. For corporates facing global exposure, being able to visualise risk in real-time can support better policy execution.
By using data and automation tools, some companies are better positioned to make adjustments when needed—rather than being locked into static positions set months in advance.
FX hedging strategy is no longer a set-it-and-forget-it exercise. Volatile currency markets demand that corporates take a more active and data-driven approach to their hedging frameworks. This may involve rethinking policies, embracing shorter-dated strategies, and using smarter tools to drive decisions.
We were pleased to contribute to this timely discussion in Risk.net, and we continue to work closely with clients to design bespoke hedging strategies that balance flexibility with governance.
Your FX hedging strategy should be reviewed regularly to ensure it aligns with current market expectations and treasury objectives. In today’s volatile environment, flexibility and speed matter more than ever.
You can reach us on 0207 183 2277 or at info@vedantahedging.com.
