Trump's tariff threat has boosted demand for currency hedging

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According to the Financial Times, Trump's repeated tariffs 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 volatility.
In recent days, exchange rate volatility has surged to levels seen during the March 2023 collapse of Silicon Valley Bank and Credit Suisse, according to JPMorgan's G7 and Emerging Markets Exchange Rate Volatility Index. Executives at banks and multinationals say 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 businesses doing business around the world.
Nathan Venkat Swami, head of FX trading at Citigroup Asia Pacific, said that since Trump was elected president of the United States in November last year, demand for hedging products has accelerated due to uncertainty over U.S. trade policy. "Trading activity slowed in February in many parts of Asia due to the Lunar New Year holiday, but volumes picked up again in March, with strong corporate hedging activity," Swami said. ”
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