Trump's Tariff Threat Boosts Demand for Currency Hedging

According to reports by Jinse, citing the Financial Times, Trump's erratic tariff policies have pushed exchange rate volatility to multi-year highs, boosting demand for foreign exchange hedging products amid corporations struggling to adapt to market fluctuations. According to JPMorgan Chase's G7 and emerging markets currency volatility index, recent days have seen volatility soar to levels experienced during the collapses of Silicon Valley Bank and Credit Suisse in March 2023.

Bank and multinational company executives stated that the uncertainty surrounding Trump's tariffs has created more demand for foreign exchange hedging products to offset the impact of sudden currency fluctuations on global business operations. Nathan Venkateshwara, Head of APAC FX Trading at Citigroup, mentioned that since Trump's election as U.S. president in November last year, demand for hedging products has accelerated due to uncertainty over U.S. trade policies. Venkateshwara noted, "Trading activity in many parts of Asia slowed in February due to the Lunar New Year holidays, but volumes picked up again in March, with strong corporate hedging activities."