Most businesses with vulnerability to foreign exchange risk – whether they’re exporters or have subsidiaries overseas – will have arrangements in place to mitigate their exposure to sharp currency moves. But what about you as an individual?
As business owners and entrepreneurs become more globally-mobile, they are more likely to have overseas investments, or receive income in multiple countries. Consequently, they can be both vulnerable to (and take advantage of) currency moves, if they have the right support.
What situations might this be applicable to? The most obvious examples are people who work in multiple countries or who are paid in a currency different to that of the nation in which they are domiciled. They will need to convert some or all of that income into a currency they can use to make day-to-day purchases. Since it’s not uncommon to see daily moves of 1 per cent on the sterling-euro exchange rate, for instance, this makes expert assistance vital.
Others might have pensions they have acquired from working in another country, be looking to purchase or sell a property abroad, or may have been paid a lump sum in a foreign currency for the sale of an overseas investment. Private client FX is also essential to immigrants to the UK who might be making regular payments on a mortgage in another country or sending money to family members back home.
Thankfully, there are offerings from proactive banks like Investec that can enable people to manage their financial position in these contexts.
First, it’s important to note that while these are private bank offerings – they are not purely reserved for the very rich. It is possible to have accounts in different currencies, and receive the assistance of a dedicated FX dealer, who will be able to monitor the market for favourable currency movements and subsequently make transactions on your behalf.
Second, while your FX dealer will not give specific advice, they will be able to provide the house view on a subject, offering the client crucial context and information about what currencies are yielding relative to others, and about what direction they are likely to move next.
Third, using FX services from a bank, such as Investec, can be particularly comforting because there is a regulatory framework imposed by the regulator which the bank is required to adhere to.
Finally, these services are not limited to people making regular transfers. Indeed, many of our long-term relationships with clients have started with them making a one-off payment to buy property overseas, leading them to other private banking products and services.
We’re increasingly seeing bigger daily moves within the foreign exchange markets – particularly off the back of diverging monetary policy expectations. A long-term relationship with a private client FX dealer can make this much more manageable.
This article is provided for information purposes only and should not be construed as advice of any nature. The views and opinions expressed are subject to change without notice.