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2025-09-16 14:30:36
[RBA Deputy Governor: Pension Fund FX Hedging to Grow Significantly, Dollar's Death Premature Talk] RBA Deputy Governor Hauser said Australian pension funds are expected to "substantially" expand their FX hedging in the long term, but noted that predictions of a declining US dollar are premature. Speaking on Tuesday, Hauser noted that the cost of hedging foreign exchange risk for Australian investors has changed little recently, while the implied volatility of the Australian dollar against the US dollar remains lower than that of US stocks. There is also no evidence that international investors have significantly reduced their holdings of US assets – all of which suggests that "predictions of the demise of the US dollar and the end of Australia's hedging model appear somewhat premature." Against this backdrop, Hauser said it was encouraging that so-called superannuation funds are still improving their ability to manage FX and liquidity risks. This is important "because even if the average hedge ratio of superannuation funds does not change much in the short term, the overall market's FX hedging will grow significantly over the longer term."
