Corporate finance teams are stepping up efforts to protect against currency swings, with 88% of corporates now actively hedging foreign exchange exposure as volatility increasingly affects profitability and competitiveness. The finding comes from MillTech’s 2026 Global FX Report, based on a survey of 1,500 senior finance decision-makers across the UK, North America and Europe. The research shows companies adjusting hedge ratios, extending hedge tenors and investing in automation as geopolitical tensions, shifting interest rate expectations and rising hedging costs reshape corporate FX strategies.

Across the corporate sector, the proportion of companies actively hedging currency exposure has risen to 88%, up from 81% the previous year. The increase reflects how exchange rate movements have shifted from being a background treasury concern to a direct driver of financial performance.

The data also highlights a widening gap between companies that have built robust FX frameworks and those still grappling with operational barriers.

Hedging adoption rises as volatility bites

Corporate hedging participation has increased across all regions surveyed, though levels vary considerably. Europe continues to lead with 95% of corporates hedging their FX exposure. North American firms also report high adoption at 91%, while UK companies remain the least likely to hedge, with 78% actively managing their currency risk.

Sentiment among non-hedgers is also changing. Around 61% of companies that currently do not hedge say they would now consider doing so in response to recent market conditions. The shift is particularly strong in the UK, where 68% of non-hedging firms say they would now explore hedging strategies, compared with 65% in North America and roughly half in Europe.

The financial impact of currency swings appears to be driving the change. Across all regions, 62% of corporates say foreign exchange volatility has negatively affected profitability or competitiveness.

Yet barriers remain. Among firms that do not hedge, 39% say they would not consider introducing a hedging programme. In Europe, that rises to 50%.

The reasons are largely operational rather than strategic. More than half of respondents, 53%, say hedging infrastructure is burdensome to implement, while 48% say capital is better deployed elsewhere. In the UK, 48% of companies cite minimal currency exposure as the main reason for avoiding hedging.

Even among firms that hedge, strategies remain selective rather than comprehensive. Average hedge ratios across regions stand at 52%, with UK and European firms hedging roughly 53% of exposures and North American corporates slightly lower at 50%.

The balance between protection and flexibility is reflected in future plans. Around 31% of corporates intend to increase hedge ratios, while 34% expect to reduce them.

Hedge tenors are lengthening as companies seek greater certainty. The average hedge length has reached 5.5 months, with European firms locking in the longest periods at 6.1 months. North American companies prefer shorter tenors of around 4.9 months, suggesting a preference for agility in response to domestic policy shifts. Overall, 62% of corporates say they plan to extend hedge tenors, compared with just 11% planning to shorten them.

Rising costs reshape FX decision-making

While hedging activity is increasing, the cost of managing currency risk has climbed sharply. On average, corporates report hedging costs rising by 67% over the past year. North American companies have experienced the largest increases, with costs up 76% on average. UK firms report increases of 66%, while European companies have seen costs rise by 59%.

In some cases, the increases are far steeper. Around 15% of corporates say their hedging costs have risen by more than 100%, including roughly one in five North American firms.

At the same time, financing conditions have tightened. Nearly three-quarters of corporates, 72%, report that interest rates or fees on financing have increased, while 42% say lending criteria have become more restrictive.

European firms appear to face the sharpest increases in borrowing costs, with 76% reporting higher interest rates or fees. However, they are less likely than peers to experience tightened lending conditions, with 32% reporting stricter credit requirements. These pressures are forcing finance teams to focus more closely on capital efficiency and execution quality.

Operational complexity is also emerging as a constraint. When asked about the biggest challenges in FX operations, 22% of corporates cite onboarding liquidity providers, while 21% highlight securing credit lines and calculating FX costs.

Pricing transparency is another issue. A quarter of respondents say obtaining comparative quotes across liquidity providers is their primary challenge. The problem is particularly pronounced in North America. Some 30% of senior finance professionals there say obtaining comparative quotes is difficult, while 26% cite challenges onboarding liquidity providers, securing credit lines and calculating FX costs.

Across all regions, demonstrating best execution and navigating fragmented service provision remain persistent concerns. A quarter (25%) of corporates say proving best execution is their biggest operational challenge, while 23% cite fragmented service models across multiple providers.

Internal expertise is another constraint. More than one in five corporates (21%) say limited FX knowledge within their organisation is a barrier to effective currency risk management. In the UK, this rises to 29%. The gap in internal expertise may explain the growing reliance on external support. More than 99% of corporates surveyed report outsourcing at least some aspects of their FX management.

Access to specialist expertise, operational efficiency and scalability are cited equally as the main reasons for outsourcing, each selected by around 30% of respondents.

Manual processes still dominate execution

Despite the strategic importance of FX risk management, many corporate workflows remain heavily manual. More than one in five corporates, 22%, say manual processes represent their biggest operational challenge in FX management. In North America, that rises to 30%.

Traditional communication channels remain widely used. Around 34% of corporates still use telephone instructions to execute FX transactions, while 29% rely on email. The reliance on manual instructions is particularly pronounced in the UK, where 40% of firms use phones and 42% use email to instruct FX trades. In Europe, 34% use phone instructions and 22% email, while in North America 29% use phones and 24% email. The problem here is that manual workflows can create operational risks, particularly during periods of rapid market movement when execution delays can materially affect pricing.

In response, digital alternatives are gradually gaining ground. The most common instruction methods are now corporate IT systems and online trading interfaces, each used by 38% of firms. Both represent a significant increase from 29% the previous year. APIs remain less common, with around 25% of corporates using APIs for FX instructions. Adoption is strongest in Europe, where roughly one-third of companies have implemented API-based workflows.

While still a minority approach, the use of APIs suggests that some corporates are starting to modernise the infrastructure behind their FX workflows.

Automation and AI move into treasury workflows

Technology is beginning to reshape how corporates manage currency risk. Every corporate surveyed says it is considering automating elements of its FX operations, while 99% say they are exploring the integration of artificial intelligence into their currency workflows.

Automation priorities differ slightly by region. Globally, the most common processes being automated are trade execution, cited by 33% of respondents, and price discovery, cited by 32%. North American firms prioritise price discovery, with 34% automating this process. UK firms place greater emphasis on reporting, with 36% focusing on reporting automation. European companies are more likely to automate the onboarding of liquidity providers, with 35% prioritising this area.

When it comes to AI adoption, corporates are focusing on three main areas: process automation, cited by 42% of respondents; risk identification, selected by 40%; and risk management, cited by 39%. These priorities reflect a shift towards more proactive and data-driven treasury functions, where technology supports faster decision-making and improved oversight of financial risks.

Geopolitics reshapes currency exposures

Geopolitical developments are also reshaping corporate FX strategies. Trade tensions and tariffs are creating new sources of volatility for multinational businesses. Around 62% of senior finance leaders say tariffs or related geopolitical developments have negatively affected profitability or competitiveness.

Operational responses have been widespread. Roughly 90% of corporates say they have changed sourcing or manufacturing strategies in ways that affect FX transactions. The shift is particularly pronounced in the UK, where 97% of firms say tariffs have influenced operational decisions affecting currency exposure. The figure stands at 87% in North America and 88% in Europe.

Despite these disruptions, sentiment among corporates remains broadly positive. Around 85% of respondents say they are optimistic about the impact of tariffs on their business operations over the next 12 months, while just 7% express pessimism.

European companies report the highest overall optimism at 88%. However, firms in the UK and North America are more likely to describe themselves as “very optimistic”, suggesting stronger confidence among some businesses in their ability to adapt.

The findings suggest that while currency volatility and geopolitical risks are intensifying, many corporates believe they are becoming better equipped to manage them.

A shift towards more flexible FX solutions

Looking ahead, corporates are increasingly prioritising flexibility, transparency and technological integration in their FX strategies. When asked what type of FX solutions would best meet their needs, specialist FX brokers or non-bank providers are the most popular choice, selected by 27% of respondents. Digital multi-bank FX platforms offering automated execution follow closely at 26%.

The preference signals a gradual shift away from traditional single-bank relationships towards models that allow corporates to access multiple liquidity providers and compare pricing more easily.

For corporate treasury teams, the survey points to a broader transformation in FX risk management. Hedging remains the primary defence against currency volatility, but rising costs, operational complexity and geopolitical uncertainty mean that firms are increasingly combining traditional hedging strategies with technology-driven tools and external expertise.

As volatility persists across major currency pairs, the ability to integrate hedging, automation and diversified liquidity access into a coherent FX strategy is likely to become an increasingly important determinant of financial resilience.