“May you live in interesting times”, runs the ancient Chinese curse. Certainly, times don’t get much more “interesting” than they are today. On one hand, we have political instability across most, if not all, the world’s continents, sovereign debt crises in the Eurozone, policies of cheap money maintained by many nations, and a slowdown, if not stagnation, of global recovery.All significant contributing factors to the increase in exchange rate volatility amongst major currencies – identified as one of the top four risks to growth in the most recent PWC Annual Global CEO survey.
On the other hand, according to the same survey, 45% of CEO’s believe that the world will become more open to free international trade, and 56% think it will be more open to cross border capital flows.
Volatility threatens margins
Any business that has customers, suppliers, assets or part of its organisation or supply chain abroad is inevitably exposed to risk of exchange rate volatility and its corresponding impact on margins.
As the appetite for, and amount of, international trade continues to grow, it can only become even more competitive. The greater the amounts involved, and the lower the margins, the bigger the impact of even small currency fluctuations.
So it’s essential that businesses understand the impact of their currency transactions on those margins and take steps to manage them as effectively as possible.
At IFX we believe that it is impossible to predict the future movements of currency markets with any degree of accuracy, and irresponsible to try.
The needs of any business – regardless of its size or sector – is best served by a strategic rather than a purely tactical approach.
For the many businesses that lack the necessary expertise and operational capability to manage this themselves, the services of a specialist foreign exchange consultancy can be invaluable.
A reputable consultancy will focus not just on the transactions themselves but also on helping clients understand their risk exposure and mitigate that risk at the earliest opportunity.
They will take time to understand their clients’ businesses, needs and concerns, and monitor the relevant currencies and markets on each their behalf – as well as the events, trends, and developments that could impact on them.
Rather than focus purely on obtaining the best rate, they will provide advice and guidance on the optimal timing for their clients’ transactions, and the most advantageous contract for the needs of their businesses.
Mitigate risk, maximise benefit, minimise cost
Strategy in place, a consultant will also be able to add consistent value at the execution phase.
They will be able to execute currency transactions faster and with less risk than their clients could alone. They’ll also provide access to better exchange rates and lower fees and commission charges than are available through more traditional channels.
As a result, they can make the process easier, safer and, in the face of ever-growing pressure on margins, significantly more cost effective.
IFX is one of the world’s fastest-growing specialist foreign exchange consultancies, serving a growing spread of corporate and private clients throughout the UK, Europe, the US and Australasia. IFX is committed to conducting its business with the highest level of integrity, and stringently observes the compliance and reporting regulations of every jurisdiction in which it is active in order to protect the company and its customers.
For more information contact:
Tel +44 (0)20 7495 8888