Businesses operating abroad are exposed to currency fluctuations
British firms are doing more business overseas than at this time last year, but nearly a third of them are dangerously exposed to swings in exchange rates, according to new research by international payments specialist FEXCO Commercial FX Services.
In a Censuswide survey of CFOs and key decision makers in medium to large UK firms trading overseas, two thirds of respondents (66%) said they have increased their levels of international business during the past 12 months.
The IT and telecoms sector led the international charge, with 77% of firms in the sector reporting an increase in overseas business in the past year. It was closely followed by manufacturing and the retail, catering and leisure sectors..
FEXCO Commercial FX Services head of dealing David Lamb commented: “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.
“Failure to fix an exchange rate can work in a company’s favour if it’s lucky, but with the stakes so high, it’s unwise to leave it to chance. So it’s alarming that such a large minority of companies leave themselves as hostages to fortune – and do nothing to protect themselves from exchange rate fluctuations.”
Total exports will reach USD68.5 trillion by 2050
The world is entering a third phase of globalisation that will boost trade, change the way companies work and improve the quality of life of millions of people, according to a new HSBC report.
Trade Winds: shaping the future of international business examines the key trade and business trends of the past 150 years and looks ahead to 2050. It forecasts that total goods exports will reach USD68.5 trillion by 2050 – nearly four times the value of global exports in 2015 and more than 150 times that traded in 1950.
Developments in technology, public policy, operations and logistics will bring many benefits, according to the report: “This third wave of globalisation will take millions of people out of poverty, raise income levels and improve quality of life. Emerging economies will increasingly catch up with mature economies as economic prosperity is spread more evenly.
“For businesses there will be new opportunities – these include new ways of working, new business models and new skills requirements. Physical borders will become less important and how we define trade will change.”
Asia is expected to be a big beneficiary of these changes, with the region’s share of global exports predicted to reach 46% in 2050, compared with 33% in 2015. That shift is likely to see China extend its lead as the world’s top exporter, while India exerts increased power. Western Europe and North America are expected to see their shares of global exports decline, but in absolute terms they will be larger than today.