“Front page article - Financial Times”
US investors have shifted a record proportion of investments to international equities.
We know what they are trying to say as it relates to asset managers, but what does that mean for corporations?
Investors are looking for additional return and believe that the USD will continue to weaken and thus the foreign equities value for US investors will increase.
Over the past 20 years whenever the front page of a paper such as FT or WSJ call for higher or lower currency, the trend is over! So if corporations are holding off protecting non US Dollar revenue, start protecting it. The speculative upside is over. The dollar is toppish.
If management is questioning why you are protecting procurement cost currency exposure, be reminded that corporations - with the exception of banks or investment banks - are not in the business of speculating in currencies. As such the cost of protecting against currency swings should be seen as part of doing business abroad, and as such as part of COGS.
