Stating the obvious for the people in finance
A research report commissioned by UK broker Moneycorp shows, depressingly, that when it comes to managing FX exposure, many company finance directors are clueless. The research, carried out by Vanson Bourne, canvassed 500 bosses. As well as highlighting a lack of confidence in sterling, more worryingly it found that, “those responsible for managing overseas trading within businesses appear to have insufficient knowledge of how currency fluctuations can affect profits. A third (30%) of finance directors acknowledged that a lack of understanding of currency risk had had a negative impact on the bottom line, and over a quarter (26%) of those were large businesses, trading an average of £2.7 million a year.”
Moneycorp adds: “Compounding the effect that a weakening pound has had on British importers is the fact that 40% of large companies surveyed do not actively protect their exposure to currency risk – even though their costs and revenues are heavily influenced by imports. That said, it seems that businesses would like to reverse this trend, with three quarters of respondents (71%) saying they would like to be more informed when considering their currency exposure.”
The report highlights that many exporters also failed to benefit from GBP weakness at the start of 2009.