Corporations concerned about currency fluctuations, rising volatility due to Chinese Revaluation

FX volatility, China drive companies to hedge more

(Reuters) - U.S. corporations are stepping up efforts to protect against currency fluctuations due to fears of rising volatility, particularly as a Chinese revaluation grows more likely.

Industry players say the FX effect on earnings is less pronounced than in 2008, when companies were caught off-guard by a dollar rally as stock markets tanked.

More companies have made a conscious effort to hedge against sharp currency movements, because sudden gyrations in major crosses can eat away at a company's bottom line. This year, the dollar is up 4 percent against the euro, reversing a downtrend in the greenback that lasted several years.

Dollar weakness has boosted revenue for U.S.-based multinationals, both by making products less expensive in foreign markets and because overseas sales become worth more when converted into dollars.

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http://www.reuters.com/article/idUSTRE63J56R20100420