Corporates Lack of FX Hedging Costing Them Millions: Survey
Posted by Colin Lambert. Last updated: February 18, 2026
UK and US corporates are reporting average annual losses in the millions from currency movements, with 80% of respondents reporting losses, 19% citing them as “significant”, thanks to increased volatility in FX markets and the decline of the dollar.
The Q3 2025 Corporate Hedging Monitor, published by MillTech, says that average losses amongst UK corporates was £6.71 million in 2025, while for US corporates it was slightly higher at $9.85 million. Alongside this, the survey says that firms are responding to the uncertainty and volatility by increasing hedge ratios and lengths, although they remain off historic highs recorded in the survey previously.
While 80% reported losses from unhedged FX risk in both jurisdictions, the effect seemed to have been felt more in the US, where 25% cited their losses as “significant”, compared to 12% in the UK. This is slightly higher than the same period in 2024, when 76% reported a net loss with 24% saying they were “significant”. There was a reversal of fortune, however, in the last quarter of 2024, 27% of UK corporates and 19% of US firms said they were significant.
The average hedge ratio in Q4 rose to 49% from 46% in Q3, however it remains well below the 57% recorded in Q2 2025 and the 52% in the corresponding quarter in 2024. In the US hedge ratios rose to 48% from 44% in Q3, and were actually higher than Q4 2024, which was at 45%. Conversely, in the UK they rose by one point from Q3 to 50%, but remain far below the 57% in Q4 2024.
The average hedge length also rose, to 6.33 months across both countries, this is up from 5.82 months in Q3, but again down on Q4 2024’s 6.47 months. US corporates appear to have reacted more aggressively this time, however, with the average hedge length rising to 6.22 months from 5.66 months in Q3 (6.58. months in Q4 2024), while UK corporates extended out to 6.45 months from 5.98, but were also below Q4 2024, which was 6.58 months.
Overall, 64% said they intend to further increase their hedge ratio, and 59% their hedge length, both are notably higher than the same period in 2024, when they stood at 26% and 32% respectively. Conversely, 10% of corporates in both centres plan to decrease hedge length and 9% their hedge ratios.
Unsurprisingly given the rather chaotic scene in the US policy arena, respondents cited central bank policy, volatility and inflation rates (all 17%) as the biggest external factor influencing their hedging decisions. The former was actually a lower concern from Q3, but up on Q4 2024, while the latter two spiked in influence from Q3, with volatility also higher year-on-year, by five percentage points.
“Q4 2025 marked a clear shift back towards defensive FX management,” observes Eric Huttman, CEO of MillTech. “While hedge ratios and tenors increased, they have not yet returned to early-2025 levels, suggesting firms continue to balance protection against cost and flexibility. However, with most corporates experiencing losses from unhedged exposure, 2026 is likely to see further increases in coverage as tariff and policy-driven uncertainty persists and major currencies recorded their largest swings in nearly a year.”
The Full FX View
This is the first time that the MillTech surveys have put a number of corporate losses from unhedged FX exposures, and it should be noted that the wider picture may be different, because there are likely to be plenty of corporates out there who benefit from a weaker dollar.
That said, it seems clear that hedging FX risks for this sector in a sensible move in such a chaotic and uncertain environment, therefore it is heartening to see more than 60% state they plan to do so. This is significantly higher than the same period in 2024, when the first hints of a more volatile US policy stance emerged, and indicates that corporate treasuries have learnt their lesson, albeit to the cost, amongst this group at least, of over $9 million per firm.
It is notable that the corporate sector, as compared to the fund manager sector that MillTech also surveys regularly, is less concerned about the cost of hedging. There was a spike in those citing it as an external factor in Q2 last years, which is to be expected given the impact of “Liberation Day”, but it has settled back down at the longer-term average around 6%. This should mean that treasuries are less likely to be put off by the “cost”, probably calculating that it is less than the realised losses from unhedged exposures.
This is an opportunity for providers to step up and meet the needs of an important sector. In the volume game that FX has largely become, the corporate sector is an afterthought. In value terms, however, it remains towards – if not at the top of – the table, meaning 2026 could be a good year for those banks with strong corporate FX franchises.
