October 22, 2024 (NO COMMENTS)

Changing differentials bring more positive carry opportunities for corporates

 

Corporate foreign exchange structurers had a tough time post-Covid. Developed-market central banks had all cut rates in response to the pandemic, meaning interest rate differentials were slender. For corporates domiciled in those low-rate countries, hedging their investments in foreign subsidiaries in higher interest rate countries would come at a cost, making it undesirable for treasurers. But with US, EU and UK rates now higher since 2022, corporates in those countries now have more opportunity