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By Saqib Iqbal Ahmed and Laura Matthews
NEW YORK (REUTERS) – Commercial regenses create the efforts to monitor the profit of the company against more dollar strength, a movement that some analysts said that points to an increased belief that the tariff plans of President Donald Trump will help the American currency longer to to stay too higher longer.
The US Dollar Index is approximately 7% above the lows of September, which will be reached in January for almost two years, because investors bought the goat for expectations that it would benefit from a strong US economic growth and Trump’s protectionist trade policy.
Speculators have loaded bullish bets on the currency, which increases the net long dollar position to $ 35 billion, the largest in almost nine years.
Commercial depressors, who often use forward contracts, currency options and swaps to reduce potential losses due to currency fluctuations, usually move at a more determined pace. But they are increasingly taking the position that the dollar can stay higher for a while or stay on these elevated levels.
“The business community is slower to act and more intentionally”, Paula Comings, head of the sale of foreign exchange at US Bank.
“(But) We have seen those who have seen considerable exposure from income abroad that they have to repatriate, which contributes to these predicted cash flow -hedging programs,” she said.
“What we hear from customers is that they intend to plan a perseverance of the dollar,” said Comings.
Multinational companies such as Apple and Microsoft have already warned the strong dollar to put pressure on financial results in the coming months.
Although there is little visibility in the total level of business department activities, interviews with market participants show the impetus to protect against further dollar strength in a high gear before the American elections of November and pending the potential victory of Trump.
“In the run-up to the elections, our research showed that North American companies under the $ 100 million market cap were sharply aware of the probability, as well as the risks, of a strong dollar after the nation had gone to the polls,” said Eric Huttman, CEO of Milltechfx.
“Half of these smaller companies reported that they were worried about the impact of policy changes on currency values,” he said.
The vulnerability of the currency markets for volatility emerged this week because the threats of American rates against Mexico, Canada and China washed up a meeting on the dollar and resulted in an increase in volatility.
Although the stronger dollar is a reflection of the relative power of the US economy, it can be a problem for some companies. A strong American currency makes it more expensive for multinational companies to convert foreign profit into dollars, while it also damages the competitiveness of the products of exporters.
