sterling fluctuations

SMEs Trading Abroad Warned to Guard Against Sterling Fluctuations

Small firms trading overseas should sign forward contracts with clients to protect themselves against the risk of the pound falling further in value, according to foreign exchange firm Moneycorp, writes Farah Jifri. Research from Moneycorp revealed that despite the value of the pound falling 14 per cent against the Euro over the eight months to the end of April this year, two-thirds of small firms that trade internationally did not use forward contracts in 2007. Forward contracts provide businesses with stability by allowing them to fix an exchange rate on the day that they become aware of their requirement for future settlement. This forward planning can prevent firms incurring losses due to exchange rate movement. “It is possible to save large sums of money through this sort of cur... »