Pensions - Articles - Trump tariff turmoil makes schemes rethink FX strategies

 Unhedged exposure to the US was something that overseas investors could rely on as a safety blanket but now, for the first time since the 1940s, that may no longer the case.

 “Trump’s tariff turmoil has tanked US markets and the dollar at the same time. European pension schemes without appropriate hedging strategies in place are in trouble. Earlier this year, in the immediate aftermath of Liberation Day, pension schemes were preoccupied with making sense of and navigating huge market moves. Now the initial storm has passed, they are quickly turning their attention to longer-term strategic currency positioning.

 “Pension schemes in vulnerable positions – with significant unhedged US exposure – could already have missed the boat. Their challenge may be one of damage limitation. For other schemes with more salvageable positions, the time to act is now to reassess exposure to the dollar. Dollar devaluation appears to be an end game goal for the Trump administration and we are seeing a range of different schemes reevaluate their currency hedging strategies as a result. “