IFRS 9 drives appetite for long-dated hedges in Asia

New accounting standard helps manage mark-to-market volatility of long-term trades

The long haul: a key driver behind this trend is that the cost of hedging has dropped significantly

New accounting rules are driving the uptake of long-dated forex hedges among Asian corporates, as growing geopolitical concerns heighten currency volatility.

“We are seeing a lot of volatility in the currency markets at the moment, and so by changing the tenor of hedges we can save on the mark-to-market costs of hedging,” says a senior manager in the Asian treasury department of a larger corporate. “I run a very large book, close to US$2 billion, so the savings can be significant.”

Bankers say