Investment Insights: Hedging U.S. Dollar Exposure

DBS Group Chief Executive Tan Su Shan suggests investors with significant U.S. dollar exposure should consider hedging due to low funding costs in Asian currencies and undervalued regional exchange rates. Speaking at a DBS Private Bank event, she highlighted the ongoing volatility expected due to geopolitical shifts in 2026.

On Monday, Tan Su Shan, the Chief Executive of DBS Group, urged investors with substantial U.S. dollar holdings to consider hedging. She noted that the low funding costs in Asian currencies and their undervalued exchange rates present a prudent opportunity for diversification.

Addressing clients at DBS Private Bank's 2026 market outlook event, Tan emphasized the persistent volatility linked to U.S. dollar investments. She stressed concentration risk and suggested hedging as a way to manage it effectively, according to her transcribed remarks.

Highlighting the attractiveness of Asian currencies, Tan pointed out that borrowing costs are significantly lower compared to U.S. dollars. Moreover, she mentioned China's ambitions to internationalize the renminbi, with DBS being the first Singapore bank capable of clearing renminbi outside China.

(With inputs from agencies.)