A third of SMEs do nothing about forex risk
Article Date: Sep 27 2007Over a third of small and medium-sized enterprises with dealings of greater than £500,000 a year in foreign currencies ‘do nothing’ to manage the risks involved, according to a survey conducted by HSBC. The study also suggests that a majority believe currency options are not relevant or available to their business.
Paul Graydon, head of HSBC’s treasury business development team, comments: ‘Many businesses still perceive foreign exchange as beyond their ability to manage, while others continue buying and selling [foreign currency] when they need it, simply because that’s what they’ve always done.’
Graydon adds that in recent weeks the pound has traded between $1.98 and $2.06, causing the cost of an order worth $1 million to vary by almost £20,000.
‘Only by having a foreign exchange risk management strategy can a business protect itself adequately from adverse rate movements while retaining some ability to benefit if rates move favourably,’ he concludes.
HSBC surveyed 501 businesses with an annual turnover of more than £10 million.
