Eric Huttman, CEO of MillTech, discusses new research and how companies are adapting to a volatile currency environment.
Currency risk has steadily risen up the corporate agenda over the past year.
Geopolitical shocks, shifting trade policies and persistent macroeconomic uncertainty (subscription required) have made foreign exchange (FX) exposure harder to ignore.
Recent tensions in the Middle East offer a reminder of how quickly global events can ripple through currency markets. Periods of political instability are often accompanied by sudden shifts in exchange rates as investors reassess risk and capital flows adjust.
These shocks increasingly affect corporate decision-making directly. In my company’s research surveying 750 senior finance decision-makers at corporates across the U.K., North America and Europe, 90% of firms reported changing sourcing or manufacturing strategies in response to tariffs and trade tensions, which affected their FX exposure.
Global FX turnover is at an all-time high, peaking at $9.6 trillion a day in April 2025. And for many businesses, the consequences of unprotected FX exposure are significant: 62% report that currency movements had a negative impact on margins in the past year. The experience has reinforced that leaving FX exposure unmanaged can quickly become a costly decision.
It is therefore unsurprising that hedging has become close to standard practice. Most companies now operate some form of FX hedging program, while many of those that do not are considering introducing one, with BNP Paribas noting a significant increase in demand for FX options from corporates in 2025.
However, the picture is more nuanced than simple adoption suggests. Many firms that don’t hedge their FX exposures say the reason is operational, rather than strategic.
Managing FX risk requires the right infrastructure, processes and expertise. Without them, recognizing the need to hedge does not automatically translate into protection.
Companies Rethinking How Long They Hedge
Volatility has prompted a reassessment of the structure of hedging programs. One noticeable shift is a move toward longer hedge horizons.
Around 62% of corporates say they expect to extend the duration of their hedges. This is likely because, in an uncertain environment, longer coverage offers greater visibility over future cash flows and margins.
But regional differences remain striking. Companies in the United States tend to hedge over shorter windows, often just a few months. Firms in Europe, by contrast, show a stronger preference for longer coverage.
The contrast reflects different philosophies of risk management. Shorter hedges preserve flexibility, allowing companies to adjust quickly as economic conditions change. Longer horizons prioritize stability and predictability.
Rising Costs Changing How Corporates Approach FX
The cost of managing currency risk has risen sharply. Higher interest rates and tighter lending conditions have increased hedging costs and reduced access to liquidity for some companies. The result is a paradox: Managing FX risk has become more important at the same time as doing so has become more expensive.
For finance teams, this has intensified the focus on efficiency. Most finance leaders say excessive manual finance processes are hindering growth, and this is leading to a reexamination of how FX transactions are executed, how pricing is obtained and how exposures are monitored.
Automation and cost transparency are increasingly part of that discussion as manual finance operations hinder scalability. Our research found that many finance teams say operational complexity remains a major obstacle, from comparing quotes across banks to managing fragmented service providers and securing credit lines for hedging.
But the shift is not purely technological. At its core, it reflects a broader effort by firms to ensure that risk management processes remain fit for purpose in a more complex financial environment.
Legacy Processes Still Shaping Corporate FX
Despite growing interest in digital tools, much of corporate FX management still relies on surprisingly traditional workflows.
Over a third of corporates continue to execute FX transactions through phone calls, while 29% use email instructions. These methods have the advantage of familiarity, but they also introduce operational risks and limit transparency.
The persistence of manual processes highlights that corporate FX infrastructure has evolved more slowly than many other areas of financial operations.
Yet change is clearly underway. Companies are gradually adopting systems that provide clearer audit trails and more structured execution processes.
Automation and AI are becoming front of mind, particularly as finance teams look for ways to reduce operational burden while improving control.
Preparing For A More Volatile Currency World
If the past few years have taught corporate finance teams anything, it is that currency stability cannot be taken for granted.
Most corporate finance leaders say they feel broadly prepared for FX volatility. However, more than half still experienced losses from currency movements. The gap highlights how difficult FX risk can be to manage, even when firms believe they are protected.
This tension captures the challenge of FX risk management. The task for finance leaders is not simply to eliminate risk but to manage it in a way that protects the business while preserving flexibility.
In an environment where exchange rates can shift rapidly, managing FX exposure is becoming a test of corporate resilience.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. See here for full legal disclosures and here for research disclosures.
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