Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites.
Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. For avoidance of any doubts and to make it easier, you may consider any links to external websites as sponsored links. Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.

UNCERTAINTY MAY MEAN FURTHER LOSSES FOR BUSINESSES, WARNS FX EXPERT

Implementing a robust strategy to manage currency market fluctuations is now more critical than ever as the UK’s departure from the European Union (EU) looms, a foreign exchange (FX) expert has told more than 60 business leaders at an event in Cardiff yesterday (Wednesday 25 January), organised by the Welsh Government.

Paul Lagley - OSTCFX - Wales Export Forum - Jan 2017
Paul Lagley – OSTCFX – Wales Export Forum – Jan 2017

Paul Langley, managing director of OSTCFX, was speaking at a seminar as part of the Wales Export Forum on managing currency risk. He described how the Supreme Court ruling on Tuesday (24 January), which determined Parliament must vote on whether the government can proceed with triggering Article 50, which starts the formal legal process by which the UK will exit the EU, resulted in a sharp drop in sterling. This illustrated how the value of the pound can change significantly, swayed by uncertainty and specific events.

He also highlighted the startling fact that some 80 percent of SMEs still haven’t taken steps to hedge their currency risk since Brexit.

“It’s always struck me as odd that a business is required to have insurance to cover its potential liabilities in so many areas. Yet 80 percent of SMEs that will readily pay these costs will disregard the risk of currency fluctuations, which are inevitable during the course of any year and potentially disastrous at a time like this,” said Langley.

The forum was opened by Mr Ken Skates AM, Welsh Government’s Cabinet Secretary for Economy & Infrastructure. It was the first of two forums hosted by the Welsh Government as Wales prepares for transition from the EU, with the second forum taking place in Wrexham on Monday 30 January 2017.

Langley noted during his speech how recent events such as Brexit, Trump’s Presidency and the economic turmoil in Southern Europe have all led to dramatic fluctuations and uncertainty for the currency markets.

Langley commented: “The only trend here is one of uncertainty, which puts exporters in an interesting position. We are in a business world where a tweet from the President of the United States could have a dramatic effect on the currency markets, where profits could be instantly cut. Every fluctuation in the market has a direct impact on the bottom line.”

Major national and international companies, including EasyJet, Apple and Sainsbury’s, were outlined during the forum as examples of organisations that have been hit hard by the impact of currency market volatility. Whether it be a fall in the pound, a strengthening dollar or increasing import costs, millions have been lost by these well-established companies as a result of a poor approach to FX management.

However, Langley advised that with a robust strategy, businesses can limit the risk of such losses: “There’s a preventative medicine, which involves making foreign exchange a fixed cost to your business, hedging as far forward as you can and limiting your potential liabilities to numbers you are comfortable with.

“Education is also important. You need to understand the risks and potential strategies available to deal with them,” concluded Langley.

The Wales Export forum aimed to provide an opportunity to bring together companies of all sizes from across Wales and offer an environment to share their exporting experiences and discuss the impact that leaving the EU will have on their businesses.

Since OSTCFX was formed in 2012, it has saved its Welsh clients in excess of £750,000 versus their previous FX provider and processed more than £500 million of transactions. The company has experienced rapid growth over the past three years, securing 800 clients in 20 countries. OSTCFX looks to form long-term, transparent relationships with companies where any margins or fees it earns are fully disclosed.