Global investors reduce hedging strategies against the dollar

Global investors have reduced hedging strategies against the decline of the US dollar to the levels near those recorded before the customs domains that shocked the markets in April, according to States Street. It is a shift in the opposite direction of recent months, when hedge strategies have increased against the dollar after the decline in both US equities and the value of the green currency after the shock of customs duties imposed by Donald Trump on April 2. Analysts have warned that investors outside the United States will continue to protect the dollar. However, the data collected by the Street Marks unit, one of the largest financial companies the assets of investors in the world, indicate that the hedge flow did not put the dollar as expected to put much pressure on the dollar. The current hedging rate shows that the hedging rate is currently 21.6%, low by two percentage points from May, and is similar to the level registered in early April. “These movements are completely different from the previous changes in the hedging rate we have seen before, which was up to 10%, and the threat of the dollar remains, but it has not yet been achieved,” said Michael Maklawal, head of the strategies of the macro economic economy at Strette. The impact of customs duties on the dollar has weakened the unrest caused by customs duties, the belief that the dollar is effective protection against the losses of US stocks, as it usually rose before during the wave of decline and anxiety in the markets. Despite changing the relationship between the dollar and shares during the April decline, the behavior of foreign investors does not appear to have changed significantly, according to what has been reported. “Everyone is paying close attention to this matter because everyone knows that the hedging rate is low and it can be higher, but the truth is that in mid -August and we saw no real height.” This can reflect that investors usually look at a longer period, from 3 to 5 years, when they assess the optimal level to protect against currency fluctuations. Based on this, the dollar remains an effective means of hedging during the periods in which the shares have a decline. The dollar and stocks also recovered, and the dollar regained a positive momentum in July with the worst scenarios associated with commercial fees, while US shares had a recovery that spurred the S & P500 to return to new record levels. And since the hedging costs involve, vacation managers may be needed longer to determine the best path from now on. For example, hedge costs against the dollar for three months for European investors in US assets rose from its lowest level to 1.31% last September to more than 2.40% in June and July, and are still stable above 2.20%. “It seems that investors are waiting to monitor the extent of the repetition of the events we saw during the first eight months of 2025 in the coming period,” Makalf said.