How the Markets and Fluctuating Exchange Rates Can Affect Your Business' Profitability
Market volatility puts your business’ profitability and cashflow at risk to adverse movements in the currency you are exposed to.
Many businesses, particularly at the smaller end, are not aware they have an exposure to foreign exchange risk. Or, if they are, they may have never quantified the size of the risk they face.
Currency market exposure comes in different forms. Any business selling goods and services overseas will be concerned that a rise in the value of the Aussie or Kiwi Dollar could damage their competitiveness in those markets. Conversely, if you’re importing anything from overseas, a fall in the value of your local currency will make those imports more expensive.
FX markets are difficult to forecast at any time, but even more so when you look beyond 6 months. While economists and market commentators can predict all they want, the reality is they never get it consistently right which makes relying on forecasts a risky strategy for your business.
How your business can mitigate against currency risk
Your best bet in combating the uncertainty that comes with fluctuating exchange rates is to have an FX strategy in place.
An FX strategy involves paying attention to and managing risk, and ensuring your business has the right mix of products and services in place to help reduce your exposure to market fluctuations.
This is where working with a trusted FX provider, like XE, comes into play. The right FX partner will be able to work with you to develop a strategy and will advise on the most suitable products and services to deliver favourable outcomes to your business’ profitability.
Want to learn more?
Download our essential FX guide for Aussie and Kiwi businesses.
Regardless of your business size, XE will work with you to tailor a FX solution to best suit your ever-changing business needs.
The information, materials, accompanying literature and documentation available on our internet site is for information purposes only and is not intended as a solicitation for funds or a recommendation to trade. XE, its officers, employees and representatives accept no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the above information.