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North American Businesses Braced for Increased Currency Volatility

March 8, 2017         By: Mike Dautner

AFEX is considered to be one of the largest non-bank providers of global payment and risk management solutions. If that weren’t enough, the results are in for its third annual Currency Risk Outlook Survey, which reveals that North American SMEs are up in arms about the currency risks brought on by increasing global political uncertainty.

The survey included over 650 financial decision makers on the global scale at SMEs engaged in international commerce about their feelings in regards to global trade, FX risk and their methods of coping with it.

Surprisingly, the majority of those surveyed, about 56 percent, expect currency volatility to rise in the next year, while about one third cited currency volatility as the number one challenge to managing currency risk.

Regardless of this expected increase, companies on the whole, feel as though they’re well positioned to deal with this unpredictability, as 32 percent expect to increase international trade in 2017.

When asked the vital question of which global events have most affected their company’s risk mitigation strategy over the last 12 months, North American clients cited U.S. monetary policy at 36 percent, the 2016 U.S. presidential election at 28 percent, the Brexit referendum at 16 percent and European monetary policy as the biggest factors.

“Concerns over currency volatility dominate this report given the major political events that transpired in 2016, namely the Brexit referendum and the U.S. election, as well as uncertainty regarding U.S. and UK monetary policy,” said Jan Vlietstra, Chief Executive Officer for AFEX. “However, the findings reveal that many businesses have tools in place and are taking an active approach to managing their currency risks, in order to not only stay afloat, but to continue the pursuit of international growth.”

The survey also deals with the managing of foreign exchange risk in detail and has some interesting findings.

“As indicated by the survey results, businesses are expecting more volatility in the coming year, but they aren’t letting that deter their growth ambitions,” said AFEX’s Americas General Manager Christian Spaltenstein. ”AFEX is dedicated to supporting our clients holistically, encompassing payment efficiency, FX expertise and timely and sound advice.”