Temasek: Weakening USD Causes Hedging Costs to Soar, Forced to Shift to Natural Hedging

Odaily Planet Daily News - Dilhan Pillay, CEO of Singapore's state-owned investment company Temasek Holdings, stated that this year the company was compelled to hedge against the U.S. dollar, as the weakening USD poses significant challenges for foreign investors. "Hedging costs have now become excessively high, so I must consider natural hedging," Pillay noted. This means Temasek must seek investments where net returns are sufficient to cover associated risks. "Some USD-denominated assets have net returns that cannot justify my capital allocation there," he said. However, the unique position of the U.S. remains unthreatened in the short term, as the country's capital markets continue to attract substantial foreign capital inflows. "Capital rotation is not easy—that's the reality." (Jin10)