Super fund FX growth threatens dealer ‘tipping point’
Overseas assets – and hedge ratios – set to grow, but lack of collateral squeezes banks
The growth of Australia’s superannuation funds is facing a hidden pinch point. The funds do not post collateral when hedging their foreign exchange exposure, pushing up capital requirements for their banks, and potentially limiting access to the market.
That scenario is attracting attention because super funds have been trying to hedge more FX risk as a result of the strengthening Australian dollar, and plan to go further.
“How much will the market take? This is a one-way flow, and the
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