Global investors boost US dollar-hedging ratio to two-year high
Hedging ratio on the greenback rises to 63% as of Apr 10
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
[LONDON] International investors are boosting their hedges against US dollar declines as the US-Iran ceasefire erodes the haven demand that had bolstered the greenback while the fighting raged on.
Global investors’ hedging ratio on the US currency rose to 63 per cent as of Apr 10, the highest since the same month in 2024, according to Lee Ferridge, a strategist at State Street, one of the world’s largest custodian banks.
The Bloomberg US dollar Spot Index fell as much as 0.2 per cent Thursday (Apr 16), and it’s now nearly back to where it stood on Feb 27, the day before the war began. The index is set for a ninth day of losses, its longest losing streak since 2006.
The US dollar, a traditional haven currency during times of turmoil, was a primary beneficiary during the conflict, and in March saw its biggest monthly jump since July. But as the ceasefire talk picked up, the hedging activity intensified, the bank’s data show, signalling that investors were shifting back to the bearish view towards the greenback that prevailed before the war.
“Those who missed the opportunity to hedge the US dollar in 2025 don’t want to miss out again,” Ferridge said. “These are good levels to start establishing medium-term US dollar shorts.”
The theme of seeking protection against US dollar losses came to the forefront in 2025, when President Donald Trump’s sweeping tariffs spooked investors and helped drive the currency to its worst annual performance in eight years. While investors refrained from shifting significantly out of US assets, they turned to derivatives that protect against declines in the US dollar.
SEE ALSO
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
The war in the Middle East caught the market wrong-footed as many traders were betting on greenback weakness to start the year. Now strategists are starting to look at the risks ahead for the currency, such as the prospect for the Federal Reserve to lower interest rates this year while the market expects other central banks to increase rates.
“The pieces are falling into place to go short the US dollar again,” George Saravelos, Deutsche Bank AG’s global head of FX strategy, wrote in a note Tuesday. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
