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Mint
30 minutes ago
- Mint
Trump Trade War Fuels Use of Currency Options as Hedge in Europe
European corporate treasurers increasingly are turning to the options market to hedge currency exposure, a more costly method than typically used, as Donald Trump's trade policies cause bigger-than-usual price swings. Daily volumes of currency options surged to a record in early April in the aftermath of Trump's 'Liberation Day' tariff unveil, according to data from the Depository Trust and Clearing Corp. At BNP Paribas SA, one of Europe's largest banks, corporate sales of FX options have doubled year-over-year in 2025 to an all-time high. Companies' increasing use of options for hedging is just one of the many ways Trump's tariffs are re-shaping activity in financial markets. Corporate finance executives are fretting over how to protect their bottom line, given that negotiations are still under way over tariffs that are set to be imposed on July 9. 'Trump has created a lot of uncertainty when it comes to trade,' said Jonas Falk, treasury manager at a unit of flat-pack furniture giant Ikea. He said he's a 'big fan' of using options, a type of derivative, to reduce currency risk and is employing them more than usual this year. Options give the holder the right, but not the obligation, to exchange currencies at a specified rate on or before a set date. They serve as protection for companies looking to limit losses from adverse price moves, or benefit from favorable ones. Some traders also use them for speculative purposes. Hedging with options in the $7.5 trillion-a-day foreign-exchange market gives companies flexibility. Regardless of spot prices, a company can let the option expire and trade at current market levels instead. By contrast, the more popular method of hedging — a forward contract — binds a company to buy or sell according to the initial agreement. While more flexible, options can be more expensive. Purchasing the right to transact comes with an upfront premium, whereas forwards have no initial cost as the transaction is agreed for the future. In the case of IKEA Supply AG, which manages the Swedish company's global supply chain, the business is exposed to pretty much every currency in the world. It's paying more for protection against swings in the market this year, Falk said, as it seeks to shield its low-price business model from disruption. 'I'd rather pay up,' he said. The growth in the use of options is down to the difficulty clients are having with forecasting cash flows, according to BNP, given the lack of certainty about where tariff levels will ultimately settle. 'Companies are buying options for their main utility function which is insurance,' said Fabrice Famery, global head of corporate sales at BNP. 'If you need to adapt your hedging program it's easier than if you enter into a straight forward.' Asian companies have also shown more interest in using options to lock in greater flexibility as tariff uncertainties persist, said Nathan Swami, Citigroup Inc.'s head of foreign exchange trading for the Asia-Pacific region. While China is inching closer to a trade deal, there's still little clarity over what the final iteration of tariffs might look like across the region. While the use of options for corporate hedging strategies isn't new, some have shied away from the derivatives as they can come with more of an upfront cost and seem more complicated. Some companies have been burnt by foreign-exchange derivatives in the past and there have been cases of banks being taken to court for allegations of mis-selling overly complicated instruments. Last year, Deutsche Bank AG resolved a €500 million claim from Palladium Hotel Group over losses suffered on currency contracts. Now, though, market swings are driving renewed demand for derivatives. Many see volumes continuing to increase, given the growing interest in options-based hedging solutions. 'We're now seeing more of an openness to buy or sell options,' said Lisa Dukes, co-founder of treasury risk management specialist Dukes & King and corporate representative on the Bank of England's FX committee. 'Options has always been a dirty word and kind of linked to speculation when actually it's just another way of managing risk.' With assistance from Catherine Bosley and Vassilis Karamanis. This article was generated from an automated news agency feed without modifications to text.


India Gazette
31 minutes ago
- India Gazette
Air India Washington-Delhi Flight held back after technical snag found during routine stopover in Vienna
New Delhi [India], July 3 (ANI): Air India cancelled its New Delhi to Washington DC flight on Wednesday after a technical issue during a routine stopover in Vienna led to extended maintenance work, an airline spokesperson said. The onward Vienna-Washington segment was cancelled, and all passengers were disembarked in Vienna. The disruption also led to the cancellation of the return flight AI104 from Washington, DC to Delhi via Vienna. Air India stated that affected passengers have been rebooked on alternate services or offered full refunds, depending on their preferences. 'Flight AI103 from Delhi to Washington, DC. on 2 July 2025 made a planned fuel stop in Vienna. During routine aircraft checks, an extended maintenance task was identified, which required rectification before the next flight and, thus, additional time for completion,' an airline spokesperson said in a statement. 'Due to this, the Vienna to Washington, DC leg was cancelled, and passengers were disembarked. Passengers eligible for visa-free entry or those with valid Schengen visas were provided with hotel accommodations in Vienna until the next available flight. For those without entry permission, accommodations are being arranged, pending immigration and security clearances by Austrian authorities. Consequently, flight AI104 from Washington, DC, to Delhi via Vienna was also cancelled, and the affected passengers have been rebooked on alternative flights to Delhi or offered full refunds based on their preferences,' the airline added. The disruption also led to the cancellation of the return flight AI104 from Washington, D.C. to Delhi via Vienna. Air India stated that affected passengers have been rebooked on alternate services or offered full refunds, depending on their preferences. Air India deeply regrets the inconvenience caused and remains committed to prioritising the safety of all passengers and crew, said Air India Spokesperson The airline emphasised that the decision was made in line with its 'voluntary enhanced pre-flight safety checks' initiative, part of its broader efforts to ensure operational safety and minimise last-minute inconveniences. Air India and its low-cost subsidiary Air India Express operate over 1,100 flights daily, flying more than 150,000 passengers. The airline acknowledged challenges due to factors like airspace closures, airport curfews in Europe and East Asia, and air traffic congestion. Air India earlier had announced that it would voluntarily undertake enhanced pre-flight safety checks and temporarily reduce services to uphold its commitment to safe operations. This will improve stability and minimise last-minute inconvenience to passengers. However, despite all efforts, due to extraneous factors such as the closure of certain airspaces, night-time curfew at several airports in Europe and East Asia, air traffic congestion and unforeseen operational issues, certain flights get delayed or cancelled. We notify passengers ahead of time to reduce inconvenience in case of planned delays or cancellations, but sometimes, certain challenges lead to last-minute disruptions, the airline said. (ANI)


Fibre2Fashion
33 minutes ago
- Fibre2Fashion
EU citizens push for renewables & energy efficiency: Survey
Eighty-five per cent of Europeans view climate change as a serious problem, with overwhelming support for stronger European Union (EU) climate action, renewable energy, and energy efficiency, according to a survey by Eurobarometer. Eight in ten respondents (81 per cent) support the EU-wide target of achieving climate neutrality by 2050. Economically, 77 per cent Europeans believe that the cost of damage due to climate change is much higher than the investment needed for a net-zero transition. Eighty-five per cent of Europeans see climate change as a serious issue, with strong support for EU climate goals, renewables, and energy efficiency, as per Eurobarometer survey. While most take personal climate action, they believe governments and the EU should lead. Concerns include poor media clarity on climate issues and disinformation. The survey covered over 26,000 citizens. Health and quality of life are closely linked to climate efforts, with 85 per cent saying tackling climate change should be a priority for improving both. Similarly, 83 per cent agree that preparing for the adverse impacts of climate change will enhance citizens' lives. Nearly four in ten Europeans (38 per cent) feel personally exposed to environmental and climate-related risks and threats. In 8 member states, more than half of those surveyed feel this way: mostly in Southern Europe, but also in Poland and Hungary. Support for renewable energy and energy autonomy remains high, with 88 per cent favouring EU action to boost both sectors. A majority (75 per cent) believe reducing fossil fuel imports would enhance the EU's energy security and economic standing, European Commission said in a press release. Additionally, 77 per cent agree that climate action will foster innovation, and 84 per cent support stronger backing for European firms to compete globally in clean tech—an endorsement of the Clean Industrial Deal. While 92 per cent of citizens report taking individual climate action and making sustainable choices in their daily lives. However, only 28 per cent feel individuals are best placed to tackle the crisis. Instead, they look to national governments (66 per cent), the EU (59 per cent), and business and industry (58 per cent) to lead the way, with 44 per cent seeing regional and local authorities as key actors. The findings also point out that media do not provide clear information on climate change. Although 84 per cent agree that human activity is the main cause of climate change, over half (52 per cent) believe traditional media fails to provide clear information. Meanwhile, 49 per cent find it difficult to distinguish between reliable content and disinformation on social media platforms. The survey was conducted among over 26,000 citizens across all 27 member states between February 18, and March 10, 2025. Fibre2Fashion News Desk (SG)