The sharp increase in the cost of options and forwards this year has had a notable impact on corporate hedging strategies. This has seen not only companies pulling back from hedging altogether, but also – perhaps more notably – a shift in the duration of the hedges taken out.
Many corporates are reverting to more straightforward linear hedging products such as forwards, which are more liquid and easier for chief financial officers (CFOs) to unwind should the market move against them.
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