Managing and mitigating the impact of volatile currency markets remains one of the biggest challenges facing exporters and importers involved in cross-border currency payments.
Because of the impact on business operations, cost competitiveness and profitability it's a crucial aspect to manage, says Herman Bezuidenhout, CEO of BeztForex, a foreign exchange intermediary company that helps businesses involved in global trade to manage currency risk more effectively and obtain competitive exchange rates.
“Imports and exports are increasingly playing a key role in the economy of South Africa, especially since our new democracy has been fully integrated in the global trade arena,” he says.
“Against the backdrop of fluctuating exchange rates, how to best manage and mitigate the impact of volatile currency markets becomes of increasing importance.”
He says without a proper foreign exchange management policy, companies are not able to control the potential adverse effects of currency movements, which can lead to increased cost and reduced market share and profits.
Furthermore, importers and exporters face the challenges posed by the cumbersome processes associated with the administration and execution of converting rand to foreign currency and vice versa – as well as the remittance and receipt of payments.
“There are a number of different approaches and strategies available to reduce risk posed by currency movements, which can be specifically customised around the company’s foreign exchange requirements. Naturally needs will differ from company to company depending on various factors – including turnover, mandates, costing model and the like,” says Bezuidenhout.
“Critical to any approach is the development of a customised currency risk management policy, which should meet the specific needs and risk appetite of a company.
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A customised currency risk management policy should meet the specific needs and risk appetite of a company. – Herman Bezuidenhout
