When the ‘natural hedge’ goes wrong
Thai Airways switched from operating in US dollars backed with FX hedging to a natural hedge strategy, but the plunging baht has called the decision into question.
Last May, Thai Airways announced a switch to a natural hedging strategy, aligning the company’s invoicing with its costs in the Thai baht. The company was concerned that the baht’s rising value was creating a foreign exchange (FX) mismatch with its inflows.
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