FX volatility, China drive companies to hedge more
(Reuters) - U.S. corporations are stepping up efforts to protect against currency fluctuations due to fears of rising volatility, particularly as a Chinese revaluation grows more likely.
Industry players say the FX effect on earnings is less pronounced than in 2008, when companies were caught off-guard by a dollar rally as stock markets tanked.
More companies have made a conscious effort to hedge against sharp currency movements, because sudden gyrations in major crosses can eat away at a company's bottom line. This year, the dollar is up 4 percent against the euro, reversing a downtrend in the greenback that lasted several years.
Dollar weakness has boosted revenue for U.S.-based multinationals, both by making products less expensive in foreign markets and because overseas sales become worth more when converted into dollars.
cont'd
http://www.reuters.com/article/idUSTRE63J56R20100420