Market Conditions

The Rise Of Currency Hedging And Risk Management

Currency hedging has long been a part of global business and trade — but now it is becoming more important thanks to increasing economic and political volatility. In a new PYMNTS interview, Karl Schamotta, regional director of risk management solutions at Cambridge Global, which sells currency hedging and related services — tasks that have recently assumed greater importance in eCommerce and other industries because of the stronger U.S. dollar and other factors — explores those issues from the point of view of farmers.

Schamotta talked about managing risk and hedging currency fluctuations in, perhaps, the world’s oldest form of production and commerce — a job that’s become more difficult in recent years, even with the benefits of digitalization.

“We’re seeing more economic and political volatility than we’ve seen in a long time, along with a lot of trade concerns,” Schamotta said. “The environment is a lot more unpredictable.”

Hedging — as in preparing for currency fluctuations and other factors — is something that eCommerce firms need to embrace, too, as another PYMNTS story demonstrates.

When Netflix reported its Q2 financials, its failure to “hedge its revenue with derivatives,” according to Reuters, led the company to lower its 2018 operating margin expectations to the lower end of its 10-to-11 percent projection. “We’ve got some adjustments to make because of foreign exchange rates, and we know we’ll make those adjustments and we’ll grow into that,” said Netflix’s chief content officer, Ted Sarandos, during the company’s post-earnings conference call.

The world is not getting any more stable — not for a while. You can be sure risk management will continue to gain importance.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.