Treasury Priorities for Multinational Corporations - Middle East and Africa

28 | Treasury Priorities for Multinational Corporations For organizations planning to adapt their FX strategies, the primary focus is squarely on refining risk management through adjustments to hedging policies and optimizing invoicing practices. A significant portion is engaged in fine- tuning existing hedging approaches, indicating a pragmatic effort to align with current exposures rather than a radical shift. Concurrently, a notable number are strategically reassessing their invoicing currencies, a powerful move aimed at mitigating FX exposure directly at its source by harmonizing revenue and cost currencies or transitioning to more stable denominations. This approach is particularly prominent in Kenya and the UAE, which represent 17% and 13% respectively of the respondents undertaking such a reassessment. Furthermore, other segments are undertaking a more fundamental re-evaluation of their risk management philosophy by implementing entirely newhedging policies, suggesting a deeper response to evolving risk appetites, recent market events, or new corporate directives. While a large segment remains steadfast, the minority actively seeking change points towards an acknowledgment among some of the need for evolving strategies in a dynamic regional market. The high percentage of “no change” responses could also imply a reliance on natural hedges, where revenues and expenses are matched in the same currency, or simply a strategic decision to self-insure against FX risk, particularly in environments where hedging instruments may be costly or less accessible. FX Instruments for Hedging Exposure The choice and utilization of FX hedging instruments are critical indicators of an organization’s proactive risk management posture. In the MEA context, the availability, cost, and regulatory environment surrounding these instruments can vary widely across countries. The survey data paints a picture of concentrated usage, with a significant segment of organizations not employing formal hedging tools. Of the 158 respondents that do employ hedging tools, FX Forwards emerge as the most popular instrument, used by 58% of respondents. This is consistent with their relative simplicity, flexibility, and effectiveness in locking in exchange rates for future transactions, making them a cornerstone of many corporate hedging programs globally. FX Hedging Instruments 70% 60% 50% 40% 30% 20% 10% 0% FX forwards Bought FX Options (with premium paid upfront) FX Options strategies with no upfront cost FX Swaps Other 58% 15% 7% 15% 6%