By Jonathan Reed, March 10, 2026

Hai ha money transfer

Understanding the Rise of Currency Challenges in 2022

The recent Kyriba Currency Impact Report has provided a comprehensive overview of the ongoing effects of currency volatility on corporate financial results. The findings confirm the anticipated trend: as the dollar strengthens amidst increased turbulence, an escalating number of corporations report facing significant currency headwinds.

Corporate Currency Risk Management: Navigating Uncertain Waters

As the US dollar (USD) maintains a robust position against a broad array of foreign currencies, its ascension relative to major currencies like the euro and British pound gained momentum in the latter part of 2021 and has persisted strongly into 2022. This persistent strength is not merely a market quirk; it has presented North American corporations with formidable currency challenges.

This condition is coupled with unprecedented volatility, making the management of corporate currency risk more complex than in previous times. Geopolitical tensions, lingering economic stagnations stemming from the COVID-19 pandemic, rising inflation rates, and ongoing supply chain disruptions have all intensified the risk landscape. By mid-December 2021, the FX Volatility Index (VIX) surged, indicating a pronounced increase in market volatility, with notable spikes recorded in early March and late April 2022.

Analyzing the Data: What the Numbers Reveal

Insights from our FX research team illustrate a troubling escalation: since late October 2021, the Value at Risk (VaR) for corporate foreign exchange exposure portfolios nearly doubled. This increase echoes a similar trend observed at the onset of the COVID-19 crisis back in the spring of 2020. However, the distinction lies in the present cost structures associated with hedging. Back in 2020, aggressive measures by central banks aimed at stabilizing economies often resulted in reduced hedging costs. In stark contrast, the current climate, marked by rising inflation and interest rates, has seen those costs significantly escalate.

Strategies for CFOs, Treasurers, and FX Risk Managers

In light of these pressing issues, discussions with corporate FX risk management teams reveal a pronounced desire to swiftly enhance existing Currency Risk Management Programs. There is a growing demand for automation and analytical tools that empower Risk Managers to stay abreast of the dynamic currency markets. As corporate strategies evolve and adapt to shifting market conditions, having real-time insights is now more critical than ever.

Additionally, FX risk management teams are increasingly adopting sophisticated analyses concerning VaR and the cost of hedging, which serve to guide their hedging strategies more effectively. Fortunately, the rise of Software as a Service (SaaS)-based solutions for managing FX exposure means that tools once reserved for large, sophisticated multinational corporations are now accessible to businesses of all sizes. This democratization of financial technology has transformed how companies approach FX risk management.

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