DESPITE AN INCREASE in overseas trade, many businesses are failing to adequately hedge against currency fluctuations.
Two-thirds of UK businesses have increased their levels of international trade in the last year, according to a survey of finance executives and decision-makers among medium to large businesses. However, a third of respondents (32%) fail to protect themselves from volatile exchange rates.
David Lamb, head of dealing, FEXCO Commercial FX Services, said: “In the current climate of tight margins and volatile exchange rates, a sudden shift in the value of the Pound can make the difference between profit and loss on a business deal.
“For example the Pound slumped 5.3% against the Euro in just one week in August – more than enough to turn a profitable deal into a loss-making one.”
Nearly two thirds (63%) of firms with a turnover of more than £50m employ hedging strategies to protect themselves from swings in exchange rate. However 59% of small firms (up to £1m turnover) have no currency strategy in place.
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