Assess Your Risk. Manage Your Risk.
Our currency risk assessment is a simple and effective way to understand and manage your currency risk. We take the time to understand your business and help you develop a currency strategy that minimises your risk.Open an Account Today
What is a Currency Risk Assessment?
A currency risk assessment is a tool we use to understand your business and your currency requirements. This allows us to then work with you to create and implement a currency risk strategy that is not only relevant, but tailored to meet your unique needs.
We take the time to understand your business and understand how and when you need to buy or sell in other currencies. There are 4 core factors we consider when assessing any potential risks.
The 4 Factors that Define Your Risk.
There are 4 factors that define your currency risk- your “exposure” to any fluctuation in the market. Understanding these elements is crucial to understanding your currency risk and thus creating an effective strategy.
- Timing – When do you need to exchange one currency for another? If you have a limited timeframe for exchange currencies, it can limit your choices to avoid currency risk.
- The amount – How much are you exchanging? The more you need to exchange, the greater the potential risk and the greater the need to be correctly protected (hedged).
- Margin – What’s your profit margin? The smaller your margin, the higher the need to monitor and manage your currency risk to prevent losses.
- Forecasting – How accurately can you forecast? The accuracy of your forecasting will influence your currency risk strategy.
What Moves the Price of a Currency?
The activity of buyers and sellers in the marketplace – or “liquidity” – drives the market and dictates the buy/sell price for any given currency
The buyers and sellers in the marketplace are driven by a requirement to trade (they need the money now) or to speculatively trade in the hopes of making a profit. Speculative trading is in turn driven by the political climate, the economic climate and unforeseen circumstances.
How to Get the "Best Rate"?
The best rate is not necessarily a fixed number – any given provider can supply a competitive rate. The “best rate” is about finding what’s right for your business.
It will be a culmination of understanding the needs of your business and understanding what moves the markets, and if there are any ongoing or upcoming political/economic events that may cause volatility in the market.
The guidance we received from Central FX has always been accurate, on our last deal with the rate being so high we bought a forward contract, resulting in a £12,000 saving compared to the rate we would have got once the contract matured.
Are You Currency Safe?
About Central FX
At Central FX, we have developed a proactive approach to help our clients manage all their foreign exchange requirements. By combining People and Platform, we can offer you a service led proposition that helps you to manage the goals and aspirations of your international trade.Read More
October in the Markets.
Bank of England Reports Published in October 2020 Financial Policy Summary and Record - October 2020 – Read the report The Bank of England’s Financial Policy Committee (FPC) assesses the…
PLEASE….Financial Markets – Let Me Sleep at Night.
“We don’t buy currency forward, as we don’t speculate.” The old adage – ‘if I had a pound’, comes to mind. To do nothing is to speculate, surely? With the…
September in the Markets.
Bank of England Reports Published in September 2020 Monthly Decision Maker Panel data - September 2020 – Read the report The Decision Maker Panel (DMP) is a survey of Chief…