Survey: U.S. companies may be ‘overexposed’ to rising interest rates

PROVIDENCE – About two-thirds of U.S. corporate decision-makers have not locked in favorable rates to mitigate their interest rate and foreign-exchange exposure, a decision that can cost their firms millions of dollars, according to a new survey from Providence-based Citizens Bank.

Despite that, the survey found that business leaders expect rates to continue to rise and the value of the dollar to fluctuate due to tariffs and other macroeconomic factors.

The Citizens Market Insights Survey queried more than 300 corporate leaders, finding that 70 percent have not locked in lower interest rates in refinancing loans or taking out new loans despite signs that rates will continue to increase. It also found that 67 percent have not used a hedging strategy to mitigate their exposure to fluctuations in the value of the dollar.

“Foreign-exchange and interest rate fluctuations can cost companies significant amounts of money each year, so it’s very surprising that more businesses aren’t taking advantage of simple hedging strategies that can help reduce their risk,” said Tony Bedikian, head of global markets for Citizens Bank.

- Advertisement -

However, the survey found that 82 percent said their company plans to take action to keep their businesses successful in an economy with rising interest rates, and 74 percent indicated their company plans to address a potential change in dollar valuation.

“Many banks, including Citizens, offer a range of solutions that help corporate clients mitigate risk, so the future becomes more predictable and they don’t have to worry as much about volatility in the markets,” Bedikian said.

Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.