One day the dollar rises, the next it falls, it’s like a rollercoaster. But for businesses, this volatility is far from fun. The fluctuations in the US currency affect the mood of the market and have a direct impact on business competitiveness.
Recently, the dollar reached R$6.18, driven by tensions between the United States and China. In yet another chapter of the trade war, the US government raised tariffs on Chinese products, and China responded with a similar measure. The move, prompted by President Donald Trump’s decisions, raised alarm bells in the global market and led investors to seek protection in safer assets, which put pressure on the exchange rate in Brazil.
This example shows how political, geopolitical and economic factors have the power to influence the value of the dollar. Changes in domestic policies, political instability and international conflicts, for example, affect investor confidence and thus the flow of foreign capital. In emerging countries like Brazil, this movement is often even more sensitive.
For companies, fluctuations in the dollar have a direct impact on costs and business planning. Importers suffer from rising prices for products and inputs from abroad. Exporters, on the other hand, can even gain competitiveness with a higher dollar, but the lack of predictability makes it difficult to plan future revenues. In addition, exchange rate volatility can increase the cost of foreign currency debts and create uncertainty when it comes to investing.
The good news is that there are ways to protect yourself. Currency hedging strategies, such as forward contracts, futures contracts and currency options, which we’ve already talked about, help to guarantee a future exchange rate, bringing predictability and reducing risks. More than a one-off solution, adopting a culture of active currency risk management is essential for companies that want to remain competitive in an increasingly global and unstable market.
In a scenario of constant oscillations, having an experienced partner makes all the difference in turning volatility into opportunity. Pryor Global supports companies in the efficient management of foreign exchange, offering customized consulting and currency hedging solutions. With a specialized team and a focus on financial intelligence, Pryor helps its clients mitigate risks, optimize international operations and make strategic decisions with confidence.
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