FX Risk Management

Currency market fluctuations can result in significant, adverse consequences for businesses, sometimes meaning the difference between a profit and a loss.

We'll help you to quantify your risk, formulate an effective strategy, and execute trades cost-efficiently.

What is Currency Risk?

Also known as exchange rate or foreign exchange (FX) risk, it's the risk that exchange rate fluctuations can affect a firm's future cash flows and profitability.

Any company or organisation operating internationally, whether through the supply chain, global sales, or investments, is likely to be exposed to currency risk.

If unmitigated, the impact of FX risk can be disastrous to a business's financial health and future prospects. Currency markets can be highly volatile, making it essential to effectively manage currency risk.

Can you afford to take the risk?

Large corporates tend to be better prepared than SMEs, but effective currency risk management doesn't need to be complex or difficult to manage

72% of SMEs

Incur losses due to currency fluctuations
57% of CFOs

Report lower earnings due to unhedged FX risk
90% of Large Firms

Have a formal FX Policy

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Benefits of Risk Management

Profits

Protect profits from the effects of adverse currency fluctuations
Cash

Bring predictability and certainty to future cash flows
Growth

Safely expand into new markets with a robust risk strategy
Forecast

Achieve your budget and goals, and identify funding gaps

How it Works

We'll crunch the numbers and do the heavy lifting so you can run your business with an effective currency programme to minimise risk and maximise opportunities

Set Goals & Identify Risks

Your qualified account manager will work with you to uncover the sources of FX risk in your business and the potential impact on your goals
Quantify Risk

Our analysts will measure your currency risk and provide statistical analysis to help you understand your risk level and make better decisions
Create your Currency Strategy

Work with our expert FX strategists to develop an effective currency programme that's fully tailored to your unique circumstances and objectives
Execute & Manage

Our experienced FX dealers will execute your plan, provide regular performance reports, and make any adjustments over time. You can also book trades online!

Let's Talk

Book your Free FX Audit

Our team of experts will quantify your risk and tailor a currency strategy to your business

Book Your Currency Audit

Our Approach

Every business is different, our decades of experience and qualifications in markets and risk management, we'll find the right solution for your business.

There isn't a one-size-fits-all approach for currency management, but we've developed a framework that produces consistent and reliable results.

We're proud to work with our clients toward the same goals, and this is demonstrated in our fixed and transparent pricing model and our commitment to educating and empowering our clients to make better decisions.

Types of Currency Exposure

Currency exposure can arise in all areas of a company's operations, and it's not always easy to spot

Transaction Risk

Arises from transactions taking place in foreign currency. It impacts cash flow and the operating margin, and typically occurs due to the time difference between an order and receipt of funds but can also arise during the pricing or negotiation stage of a deal or project.

For example, a UK firm importing from China could face reduced margins if the pound falls vs the dollar or Chinese yuan.

Economic Risk

Describes the risk to a company's market value caused by exchange rate changes. Such currency movements can impact a company's competitiveness, future cash flows, and value, affecting long-term decisions such as where to invest or markets to enter or exit.

For example, a UK firm exporting to Ireland may be less competitive if the pound gains vs the euro as they will be comparatively expensive.

Translation Risk

Also known as accounting exposure, this is the risk that assets or liabilities change in value due to exchange rate changes. It typically arises when translating the financial statements of a foreign operation when its functional currency differs from that of the parent company.

For example, a UK firm with a French subsidiary which consolidates to GBP could report lower earnings if the pound gains vs the euro.

Hedging Instruments

If you can't shift, match, or net the exposures then you may need to use financial instruments to hedge your risk.

Oku Markets offers the full range of FX instruments. Here's a quick introduction to the most common trade types.

Spot Contract

For immediate settlement
The rate is agreed at the point of execution and delivery of funds is made straight away, with most currencies available to settle on the same day
Spot contracts are used to make payments or to exchange currencies at the prevailing spot exchange rate
Forward Contract

For future settlement
The rate is agreed at the point of execution but delivery of funds is scheduled for a future date or within a date range
Forward contracts allow businesses to secure exchange rates as a means of protecting from adverse currency movements

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FX Swap

The simultaneous purchase and sale of one currency for another across two different dates
FX Swaps are used to manage cash imbalances between dates
For example, if there is a time gap between a foreign currency payment and a receipt, a Swap can be used to fund the payment ahead of the receipt

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Hedging Programmes

Deciding the amount to hedge and over what timeframe depends on the visibility, certainty, and sensitivity of your future-dated currency exposures

FX Orders

Protect against short-term downside risk or use market volatility to your advantage by targeting a more favourable rate. We monitor orders 24 hours a day and we'll alert you once the rate is triggered

Take Profit Order

Set a trigger level better than the current spot rate. Should the level be achievable, we'll book the trade immediately and alert you. You can then choose to take delivery of the funds or roll the position into a forward contract.
Stop Loss Order

Set a trigger level at a worse rate than the current spot rate to prevent greater losses. Care should be taken with Stop Loss orders, but we'll guide you through the process.
One Cancels Other (OCO) Order

Set both a Take Profit and Stop Loss order at the same time. As either level triggers, the other is cancelled.

Download your free guide to Managing Currency Risk

Protect your business from unpredictable market swings with proven solutions in our expert guide

Trade with Confidence

Dedicated & Expert

A qualified and experienced account manager will guide you through every step
Safe & Secure

Funds are safeguarded by our FCA-regulated e-money partners at banks and credit institutions
Fair & Fixed Price

All exchanges are made at fixed and transparent pricing, with no hidden fees

Learn More Security & Regulation

FX Risk Management

What is Currency Risk?

Can you afford to take the risk?

Benefits of Risk Management

Profits

Cash

Growth

Forecast

How it Works

Set Goals & Identify Risks

Quantify Risk

Create your Currency Strategy

Execute & Manage

Book your Free FX Audit

Our team of experts will quantify your risk and tailor a currency strategy to your business

Our Approach