Comment: The surge in volatility before the US election has increased efforts to hedge

Source: Bloomberg

Author: Carter Johnson, Michael O’Boyle, Eddy Duan

It is less than a month before the voting date of the US presidential election.

Although the election of the presidential election and the parliamentary elections is becoming more and more matched, Kamara Harris and Donald Trump have a very different view on trade, government expenditure and economy.Companies that carry out business in different countries are facing the possibility of multiple results in elections, including the Republican or Democratic Party's victory. These situations may lead to severe fluctuations in the foreign exchange market.That way.

This has led to an increase in exchange rate volatility, and the one -month volatility indicator of the euro, Mexican pizza and the US dollar index has risen on Monday on Monday.Data compiled by Bloomberg show that the one -month implicit volatility of the euro is currently close to the highest point of about a year, and the indicator of Mexico Peso is currently the highest level in about 2020.The price of the Bloomberg US dollar period index for a monthly period is currently at the highest level since 2023.

Eric Huttman, CEO of Millennium Global Investments LTD., said that corporate library is increasing the hedging ratio and extending existing long -term and swap contracts by November 5."Their mentality is that the result of the election may cause major changes in the market. I can take action now, '" Huttman said.

Enterprises are actually locking as much certainty as possible.Many companies have been increasing hedging in recent months. Signing the hedging contract after the maturity date in the United States election to avoid short -term fluctuations that usually cause excessive pricing.

U.S. Bancorp recently surveyed by about 1,000 financial leaders showed that about 60%of corporate financial executives stated that their interest in interest rates and exchange rates has increased due to political risks around the US election.

Milltechfx Huttman said that three different types of companies -companies, national defense industry companies, and technology and semiconductor companies that develop business in China -are particularly interested in the preservation of hedging.

Some currencies have attracted more attention than other currencies.Due to the close connection between the United States and Mexico, the Mexican peso is particularly sensitive to Trump's trade policies.