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Euro Hedging Costs Surge as Traders Respond to Political Risk

  • Concerns over French elections spur volatility to year’s high
  • Bearish euro bets increase as Le Pen narrows gap with rivals
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Photographer: Didier Weemaels

Investors in the euro are getting increasingly concerned about the risks surrounding the French presidential elections, pricing in the options market shows.

The premium needed to protect against swings in the single currency has now risen to the highest this year, while put options are the most expensive in relation to calls in almost two years. Specifically, investors seem most preoccupied with risks surrounding the second round of elections scheduled for May 7, with various gauges showing reduced anxiety before and after the event.