Forex volatility puts focus on corporate hedging

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Wild swings in foreign exchange rates over the past few months have put a renewed focus on corporate hedging in Europe and the US. With volatility expected to remain high in the coming year, many firms are pulling back from complex, cost-reduction hedging strategies towards vanilla instruments with a cap on the downside.

The euro started last year at $1.4583, reaching as high as $1.5990 on April 22. It maintained its strength against the dollar until July before tumbling to $1.2452 by November 1

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