As geopolitical tensions collide with shifting central bank policies, the latest MillTech Corporate Hedging Monitor reveals that CFOs have pushed hedge ratios to record highs. While 96% of firms faced losses from unhedged exposures this quarter, a proactive shift toward longer tenors and higher coverage has successfully halved average quarterly losses compared to 2025.
The first quarter of 2026 has been a masterclass in navigating “perma-crisis.” From direct geopolitical interventions in South America to the escalating conflict in the Middle East, the global macro environment has forced a fundamental rethink of treasury strategy.
The newly released MillTech Q1 2026 Corporate Hedging Monitor, which tracks the behavior of 250 senior finance decision-makers, confirms that the “wait-and-see” approach to currency risk is officially dead. In its place is a highly proactive, defensive stance that has already begun to pay dividends for the bottom line.
The most striking figure in the report is the average hedge ratio, which climbed to 57% in Q1 2026. This isn’t just a quarterly uptick; it is the highest ratio MillTech has recorded since it began tracking this data over two years ago.
Simultaneously, CFOs are locking in these protections for longer durations. The average hedge tenor or length of the hedge increased to 6.62 months, up from 6.33 months in the previous quarter. By extending their tenors to the longest levels seen since 2024, treasurers are signaling that they don’t expect the current volatility to be a short-term blip.
The surge in hedging is a direct response to the tangible damage currency swings are dealing to corporate P&Ls. The report reveals that an staggering 96% of firms experienced losses from unhedged FX exposures during the quarter.
While the average loss per firm was £908,000, a significant 14% of companies saw their losses balloon to between £1 million and £4.9 million. The primary drivers of this financial erosion include:
Higher Import Costs (22%): As the US dollar hit four-year lows in January before rebounding sharply amidst wartime safe-haven demand, the cost of raw materials and international supplies became a moving target.
Earnings Volatility (22%): For firms reporting in one currency but operating in several, the lack of a stable “anchor” has made cash flow forecasting nearly impossible without robust forward contracts.
Increased Hedging Costs (18%): Ironically, the cost of protection itself has risen as volatility-sensitive options and forwards pricing reacts to the chaotic market.
While both regions are turning to hedging, the intensity of the response varies.
In the United Kingdom, the mean hedge ratio hit 58%, with a majority of firms (61%) now choosing to hedge between 51% and 75% of their total exposure. UK treasurers also prefer longer protection, with mean tenors reaching 6.98 months.
In the United States, the shift has been more abrupt. US mean hedge ratios jumped from 48% to 56% in just three months. More tellingly, 16% of US firms are now “super-hedgers,” protecting 76% to 100% of their exposure, compared to almost none in previous periods.
Perhaps the most insightful takeaway for CFOs is that FX strategy is no longer being driven solely by currency prices. Credit availability (18%) emerged as the top external factor influencing hedging decisions.
As traditional banks continue to tighten lending standards, a trend noted by the Federal Reserve, businesses are being forced toward alternative lenders and private credit markets. These lenders often demand higher interest rates and more stringent risk management protocols, further incentivizing CFOs to de-risk their currency exposure to remain attractive to creditors.
Furthermore, Central Bank Policy (16%) and Inflation Rates (16%) are acting as twin pressures. With the war with Iran driving up energy and commodity prices, inflation is colliding with the Fed’s easing trajectory, creating a “perfect storm” of uncertainty that makes unhedged positions a liability.
The most heartening data point in this report is that despite the chaos, corporate losses have actually decreased. In 2025, average quarterly losses topped £2 million; today, they sit under £1 million.
The lesson for our readers is clear: Proactive risk management is not just a defensive cost, it is a capital preservation strategy. As MillTech CEO Eric Huttman notes, the data underscores the “financial impact of FX risk management” and illustrates just how rewarding a strong strategy can be during periods of intense volatility.
For the CFOs of 2026, the question is no longer if they should hedge, but rather how much further they should extend their shield.
Methodology Note: The MillTech Q1 2026 Corporate Hedging Monitor surveyed 250 senior finance leaders (market caps $50m–$1bn) between April 28 and May 7, 2026.