Skip to main content

In the Wall Street Journal, Amol Dhargalkar explains why companies are rethinking their hedging programs as the Fed raises interest rates

July 25, 2022


Amol Dhargalkar speaks with the Wall Street Journal as aggressive rate hikes from the Federal Reserve increase the strength of the U.S. dollar against international currencies, and provoke companies to review their hedging strategies.

“The strong dollar is forcing companies to rethink how they can manage their hedging programs,” said Amol Dhargalkar, chairman and managing partner at Chatham Financial Corp., a financial services firm. “Even those that are benefiting right now are aware that this won’t be forever and are revisiting their programs.”
The Wall Street Journal
There are additional complications with U.S. GAAP rules governing hedge accounting practices for foreign currency hedging.

"U.S. accounting rules around functional currencies — the main currency in which an entity conducts its business — and derivatives often create additional challenges for multinationals depending on their entity structure, intercompany cash flows and financial reporting objectives, said Mr. Dhargalkar. The Financial Accounting Standards Board, which sets U.S. accounting standards, earlier this year issued an update meant to better align hedge accounting with companies’ risk management. However, the problem persists."

Our expertise for corporates

Chatham provides the knowledge and expertise needed to manage the financial risk associated with interest rate, commodity, and foreign exchange volatility. We develop and implement hedging strategies for hundreds of public companies annually, based on deep and productive banking relationships, giving us market data and insights to enable you to secure the best pricing and terms. Our goal is to empower you to strengthen your financial position and support your company’s financial objectives.

With expertise across hedge accounting, regulatory compliance, valuations, and hedging transactions, we can support all aspects of financial risk management. Our ChathamDirect platform provides convenient workflow, robust analytics, and comprehensive accounting methodologies, supported by our unmatched commitment to client service. This unique combination of strategy, operations, and technology will empower you to run a best-in-class hedging program.