Currency Volatility Hits North American Corporate Profitability: Report

While uncertainty over the impact of US tariffs on domestic inflation persists, the associated currency volatility is impacting North American firms, leading to an increasing in FX hedging on the part of corporates.

The MillTech North American Corporate FX Report 2025 finds that 69% of the usual 250 finance professionals surveyed have found their profitability or competitiveness negatively impacted by volatility – largely a weaker dollar of course – leading more to hedge their risk. Another driver of increased hedging in the report is the finding that 83% of respondents “experienced recent losses due to unhedged FX risk”.

This has resulted in 91% of respondents hedging their FX risk, up from 82% in the 2024 survey and 81% in 2023. The report says this is in spite of higher hedging costs – with 94% reporting this compared to 73% last year (the average increase is 76%).

Firms are also talking about adjusting their hedge lengths, but doing little about it. MillTech says 64% are planning on increasing hedge lengths, but in the survey itself, the average hedge length stands at what MillTech says is a three-year low at 4.9 months. Corporates are also using FX options more frequently, with 86% of respondents now incorporating them in their hedging strategies.

Elsewhere the survey finds that the top concerns around tariffs are currency values (36%), the uncertainty around what the tariffs will actually look like, which is preventing major decisions being made (34%) and, surprisingly given it is not clear what this has to do with tariffs, 33% cited counterparty risk.

Of the few firms that don’t currently hedge FX, more (65%) are considering it compared to 2024 when 51% were doing so. The top reason for not hedging was burdensome infrastructure, cited by 83% of firms, up from just 20% last year, suggesting they want to hedge but lack the tools.

The creep of automation continues amongst North American corporates, 29% use the phone for FX trading, down from 33% in 2024 and 35% in 2023 – MillTech says 24% use email for FX trades, down from 27% in 2024 and 34% in 2023.

“Many corporate CFOs have traditionally treated FX like a duck in the corner of the room, they pay it little attention until it starts quacking loudly,” observes Eric Huttman, CEO of MillTech. “In 2025, that quacking is impossible to ignore. North American businesses are facing an increasingly volatile landscape, with currency shocks and trade disruptions affecting their competitiveness and profitability.

“This has served as a wake-up call, and more firms are taking out insurance in the shape of FX hedging to protect their bottom lines, even despite hedging costs soaring,” he continues. “Many are reassessing their entire FX risk management infrastructure, ditching manual processes and adopting technology like AI and automating manual processes to improve speed, accuracy and decision-making.

“For too long, currency risk has been treated as a background issue, quietly managed by treasury teams while broader business priorities took centre stage,” Huttman concludes. “But in an era where currency swings can erase quarterly gains, proactive FX risk management is essential. Businesses can no longer afford to ignore the duck. It’s time to listen, prepare and build smarter, more resilient FX strategies.”