During the last few weeks, many items brought instability to the markets. The U.S. election, Brexit, the second wave of COVID-19 and the growing debt of countries resulting from the extraordinary measures taken by governments around the world to curb the health crisis are only a few examples of these items. The foreign currency market, likely the most unstable asset class in the world, has not escaped this trend.
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The extent of risk is already quite significant in “normal” conditions to warrant special attention. The above example shows that, in a crisis situation, the size of exchange rate variations and the speed at which they occur can have a strong impact on your financial results. It clearly shows that there is a need for a foreign exchange risk management policy.
Foreign exchange risk is among those risks that are said to be rapidly spreading and have a severe impact. Businesses should therefore be even more wary of these high-velocity risks as they quickly hit organizations. A foreign exchange risk management policy is a necessity as exchange rate fluctuations, both in terms of direction and magnitude, are sudden and unpredictable and can be very significant.
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To take further action:
Foreign Currency Risk
Risk Management Policy
COVID-19 Plan for recovery using your risk management policy as an anchor
International markets: a world of opportunities
Expanding business abroad is a source of growth, but it also entails risks for SMEs. It is also complex to monitor the successive impacts of exchange rates on the company’s anticipated performance.
D-Risk FX Budget & BI, offers SMEs performance, risk and test scenario analyses, broken down by market, currency and business line, with a tailor-made hedging strategy and real-time monitoring of the company’s anticipated performance.
Gain autonomy, automate your processes and approach your foreign markets with the security of a clear foreign exchange risk management strategy and monitoring that matches your ambitions.