Limited-loss hedges help US firms dodge costly FX moves

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Foreign exchange structurers are seeing increased demand from US corporates for options-based hedges that can limit losses on their net investment hedges caused by the US dollar’s selloff.

While the economic value of derivatives hedges offsets changes in foreign assets, when those positions hit maturity companies can face hefty mark-to-market payments.

Bank structurers, though, say companies with foreign assets and subsidiaries in places like Europe, where the euro has strengthened significantly

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