European corporates see rise in hedging costs
Shorter and more frequent hedging cheaper
European corporate treasurers have seen a sharp increase in long-term hedging costs due to regulatory changes and extra capital charges on trades, which have forced some treasuries to rethink their approach to currency risk.
As additional costs pile up, some treasuries are moving away from hedging exposures over long-term periods and using shorter contracts more frequently instead. The extra expense is due to reporting requirements, trade repository fees and capital requirements under Basel III
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