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SME rip-off

Last July, UK broker Moneycorp published research that showed the lack of understanding of FX risk among UK finance directors.

The broker has now released a new report showing the extent to which UK SMEs may be getting ripped-off in FX.

While the report lacks rigour – it extrapolates one quote example over a whole year’s worth of hedging for the totality of UK SMEs involved in import/export – it does give an idea of how profitable the SME market still is for UK clearers. Moneycorp estimates the banks are making £1.7 billion a year from SME spot FX.

Moneycorp’s conclusion is that companies should shop around or use a “foreign exchange specialist” such as, oh, themselves. So you may take their research with a pinch of salt. At the very least finance directors should wake up to the effect of lazy hedging on the bottom-line.

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