Navigating Volatility with Tailored Hedging, FX, and Financing Solutions

The global economy has entered a new era of volatility, testing the resilience of even the most established global businesses, and Asia-Pacific’s export-oriented economies are often at the centre of the turbulence.

Regional economies that run a current account surplus, such as South Korea and Taiwan, are now facing heightened exposure to foreign exchange (FX) shifts, particularly against the US dollar. These risks are amplified by looming uncertainty around tariffs and shifting trade policies, which simultaneously threaten export demand and destabilize currency positions.

“Over the past 12 months, the clear shift is that our clients in Asia require more tailor-made solutions,” said Obbe Kok, ING’s head of Financial Markets in APAC. “The past decade of low interest rates and low volatility provided a relatively simple environment for businesses in the region, but we have entered a new era of higher, persistent interest rates with underlying inflation. This volatility creates uncertainty and requires a more sophisticated approach.”

ING’s hedging solutions are one of three pillars of its Financial Markets & Strategic Products division – alongside investments and funding solutions – and are tailored to help clients better predict cash flows to ensure financial stability in an ever-changing landscape. With interest rates remaining high compared to the previous decade, interest rate hedging can ensure stable balance sheets, certainty in financing costs and future expenses, and more predictable cash flows.

“We are in a new era of higher financing costs. The profound uncertainty, not just about inflation but its future path, makes it impossible to predict where rates will go. Clients are often left in doubt about the best course of action,” said Obbe. “At ING, we assess our clients’ needs and requirements on a case-by-case basis, to provide them with tailor-made hedging strategies that address their pain points precisely, with confidence,” he added.

ING provides a multitude of solutions and flexibility to mitigate exposure for APAC businesses active in the international marketplace and exposed to FX risks, including FX spot, forwards, swaps, options, and other FX derivative instruments.

In addition to offering general corporate lending solutions, ING provides securities-based lending, enabling APAC businesses to raise capital for growth and investment opportunities. These loans are tailored to meet the unique needs of each client, with customized structures, durations, and repayment methods designed to align with their specific objectives. This flexibility is particularly valuable in the APAC region, where many conglomerates operate as a mix of publicly listed entities and family-owned businesses, requiring bespoke financial solutions to support diverse ownership and operational structures.

"With higher interest rates, financing has generally become more expensive for corporates. ING offers both short-term and long-term loans secured by securities as collateral,” explained Obbe. “In addition to assessing cash flow, we also consider the value of the assets used as collateral to provide the most attractive rates, to help clients maximize potential returns on their growth capital.”

For companies navigating market volatility, ING’s deal-contingent hedging (DCH) offering serves as a powerful hedging tool, enabling APAC businesses to pre-hedge interest rate or currency exposure of major transactions with a key safety net: if the underlying deal is cancelled, the hedge is terminated with no settlement required.

Obbe cited an example of this type of volatility and complexity, “An Australian conglomerate was in the process of divesting a subsidiary in Mexico to a US-based investor. This transaction presented a unique challenge as the client held a swap on its Mexico investment that was profitable. If the divestment proceeded, they would no longer require financing for the investment but would still need to address the profitable swap. The deal was contingent on regulatory approval in Mexico which added significant uncertainty. Recognising this, ING structured a deal-contingent unwind to the swap, adapting DCH to the client’s divestment scenario.”

To ensure success for the client, ING needed to develop a unique structure to meet all their needs. Obbe continues, “We were able to help the client by creating a structure that entailed that: If the divestment was completed, the client could unwind the swap and realise its locked in profit, and if the divestment fell through, the swap would remain in place, allowing the client to continue with their existing strategy.”

This tailored solution successfully addressed the client’s needs across multiple jurisdictions. ING’s excellent track record in designing highly tailored DCH strategies based on deal likelihood, timeframes, volatility, hedge size, and tenor is invaluable in helping clients secure predictable costs in Project Finance, M&A or divestment projects with long lead times, where regulatory approvals are pending.

ING combines deep local expertise with the strength of a global network to deliver value to its clients. Insights from on-the-ground teams deepen understanding of client needs, enabling tailored solutions that help clients navigate the unique conditions of each market.

“Our local expertise is seamlessly amplified by our global reach, particularly through our deep-rooted connections to Europe,” said Obbe. “We offer end-to-end support for APAC businesses aiming to expand internationally – especially into regions like Central and Eastern Europe, where we have a strong presence. This includes reliable hedging and FX solutions to simplify cross-border financial operations and make international growth more accessible.”

Sustainability is a core focus for ING. Beyond traditional sustainable finance offerings like lending and bonds, ING has pioneered innovative solutions such as the sustainability-linked derivative, aligning the financial performance of the derivative with measurable sustainability outcomes. These solutions go beyond only managing risks, but also incentivize clients to reducing carbon emissions, improving energy efficiency, or advancing social initiatives.

“As volatility becomes embedded in global capital markets, the strategic advantage lies not in reacting to market shifts but instead in mitigating risk as thoroughly as possible. At ING, we combine in-depth local expertise, a robust global network, and a commitment to sustainability, to tailor financial solutions that help clients navigate near-term volatility and uncertainty to secure long-term business objectives.” Obbe concluded.