By Michael O’Neill
Corporate treasurers are feeling a little like Harry Potter in The Half-Blood Prince. That’s when young Potter lamented to Hermione, “It’s not easy being the chosen one,” after she teased him about being Professor Slughorn’s favorite.
Treasurers can relate. They’re responsible for managing their company’s financial risk—especially foreign exchange—in a world where facts are no longer relevant. Instead, perception, narrative, and emotional appeal now shape reality more than objective truth ever could.
One particular octogenarian demonstrated this perfectly last night, delivering a one-hour, forty-minute speech extolling his virtues before a joint session of Congress.
Donnie from Dune
President Trump’s speech could have been written by Frank Herbert (even though he’s dead), the author of the Dune series. Dune, of course, is about a race of people who, for the most part, had their heads in the sand.
Fact-checkers from multiple outlets—including PolitiFact, ABC News, and CBS News—unanimously agreed that his remarks were riddled with inaccuracies, falsehoods, and ridiculous exaggerations.
One of the most blatant? Trump’s claim that Canada is a major source of fentanyl entering the U.S. He used this assertion to justify declaring a national security threat and imposing 25% tariffs on Canadian imports.
The problem? It’s not true.
Donnie on Drugs
The New York-based Council on Foreign Relations (CFR), an independent and nonpartisan think tank, completely disagrees with Trump’s claim. The CFR’s leadership includes:
✔ David Rubenstein, co-founder and co-chairman of The Carlyle Group
✔ Jamie Miscik, former Deputy Director for Intelligence at the CIA
✔ Jane Fraser, CEO of Citigroup
✔ James Gorman, CEO of Morgan Stanley
These are not stupid people. And the article they published yesterday suggests that someone’s elevator doesn’t go all the way to the top of Trump Tower.
The CFR’s report stated:
“Canada plays virtually no role in the U.S. fentanyl influx, especially compared to other countries. The country contributes less than 1 percent to its southern neighbor’s street fentanyl supply, as both the Canadian government and data from the DEA report.”
In other words? The so-called “national security threat” is fiction.
Donny-Disorder Hedging
For corporate treasurers, managing financial risk is already challenging. Doing so when Washington’s narrative is fluid and fantasy-driven? Even more so.
And FX risk is like playing dodgeball in a minefield—one wrong move (tariffs, interest rates, or geopolitical chaos) can blow up your profits. One day Trump slaps tariffs on autos (March 4), the next day (March 5) they could be suspended. If your business deals in cross-border transactions, FX swings aren’t just abstract numbers on a screen. They hit your bottom line.
Fortunately, FX hedging isn’t rocket-science. Let’s break it down into two simple, no-B.S. strategies every small business can use to protect profits.
Forward Contracts: Lock It In, Sleep Easy
A forward contract lets you lock in today’s exchange rate for a future transaction, shielding your business from nasty surprises.
✔ Buying USD? A Canadian business can lock in a 1-month forward at -20.85 pips, setting the effective rate at 1.4364, no matter what happens.
✔ Receiving USD? If you like today’s rate, you can lock in the same 1-month forward at -20.85 pips, ensuring your effective rate is 1.4364.
💡 Forward points are NOT a fee—they simply reflect the interest rate differential between USD and CAD, expressed as FX points.
Why It Works:
✅ Predictable costs = no guesswork
✅ Stable cash flow = no sleepless nights
If you don’t have the cash to buy the contract outright, you can hedge using margin. That means pre-paying a small portion (3–10%) upfront, with an agreement that cancels the contract if the exchange rate moves past a certain margin level.
It sounds more complicated than it I but your Agility Forex FX advisor can easily sort you out.
2. Currency Options: FX Insurance Without Commitment
If you like the idea of protection but still want flexibility, an FX option lets you secure a rate without forcing you to use it.
✔ Worried USD might skyrocket? Buy an option to cap your exchange rate—if the USD stays cheap, you ignore it.
✔ Concerned the USD will tank? Buy an option to lock in a minimum rate—if the USD holds steady, you let it expire.
Why It Works:
✅ No downside risk
✅ Full upside potential
The catch? Options cost money—so use them wisely. Your Agility Forex FX advisor can walk you through this simple but effective strategy.
You Can’t Fix Stupid, But You Can Hedge Against It
You may not be able to control Washington’s fantasy-driven policymaking, but you can protect your business from its consequences. And let’s be honest—it’s far better to sip a fruity cocktail on a sun-kissed beach than to be contemplating your future from the ledge of a building.
