The Swedish tanker owner has been hedging against currency fluctuations since 2005.
The dollar has strengthened against other major currencies.
Stockholm-based Concordia’s functional currency is the US dollar, but moves in the currency’s value against the Swedish krona impact results and the company’s equity.
The US dollar has suffered a seven-year downward trend, but in the past week the greenback has posted multi-month highs against major European currencies.
Against the krona, the George Washington hit a 6.5-month high Monday of SEK 6.47. By Thursday, the dollar had scaled back to SEK 6.61 in New York trading.
A Reuters poll this week found that 35 out of 41 currency exchange analysts believe the dollar has begun a long-term recovery.
With a large share of its revenues, costs and balance sheet in US dollars, Concordia Maritime sees an increase in equity with a stronger dollar, and a decrease when the buck is weaker. The equity hedge served to blunt the effect of those shifts.
Ending the $135m equity hedge, which amounts to about 50% of Concordia’s equity, means “there will now be no hedge against exchange rate fluctuations,” Concordia said.
Source
:
Tradewinds