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Bank of America’s G10 FX strategist Howard Du is warning U.S. corporations to adopt a more proactive hedging strategy for 2025, marking a significant shift from 2024’s approach. While companies could previously afford to wait for dollar weakness before repatriating overseas earnings, the macroeconomic landscape has changed dramatically. With the dollar index at a two-year high and Trump’s re-election bringing potential trade uncertainties, companies facing currency risk (particularly the 41.6% of S&P 500 revenues generated overseas) need to consider immediate hedging strategies. The bank suggests that global trade uncertainty and potential tariffs could drive further dollar strength, with current volatility pricing not yet fully reflecting these risks. The recommendation is clear: “hedge now, worry later,” though mid-2025 might bring some normalization depending on tariff outcomes and fiscal policy.
