Foreign Exchange Risk Management and Brexit

Foreign Exchange (‘FX’) Risk Management (or Currency Hedging as it is often referred to) is forming an increasing part of the Treasury Solutions service offer.  The high level of volatility of the Euro against its major trading currencies (especially US Dollar and Sterling) has meant that companies have had to deal with FX Risk Management on a much more formal and integrated basis in recent times. The result of the Brexit referendum has pushed this to the top of the Board agenda for importers from and exporters to the UK.

In the past, this has posed certain problems for companies, not only because of the speed at which this market moves, but also due to the range of derivatives available to manage this risk. In some cases companies were not always familiar with the alternatives available to them and/or Board of Directors and were cautious about the use of derivatives.

Treasury Risk and FX Management

  • Devise FX Hedging strategy as a pre-cursor to investment and/or acquisition activity
  • Devise FX Risk Management strategy where borrowings are in a currency other that EUR
  • Asses the impact of foreign exchange rate movements on EUR dominated prices where goods are supplied from outside the Eurozone but invoiced in EUR to Irish Companies
  • Undertake accounting and foreign exchange projects (especially for both multi-nationals and high-tech export oriented companies)
  • Devise foreign exchange risk management strategies where companies have material exposure on either their purchases or sales to movements in foreign exchange rates in order to assist in the achievement of profit targets, margin attainment or financial covenant compliance.

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