What Hedging Tools and What Flexibility is Right for Your Business?

By Jamie Jemmeson ACSI, MSTA at Infinity International In the previous blog we addressed the ‘What impact could hedging have on your business’, where we unpacked some of the difficulties of recognising your exposure and having the ability to accurately forecast during these COVID conditions. Given the current backdrop in the UK, now could be an opportune time to consider your framework for managing your foreign exchange risk and what level of flexibility you require. In short, given the current circumstances does your current approach offer you the flexibility you need? Before addressing the flexibility which various products can provide, it is important to take note why this could be significant in the second half of the year. Concerns of COVID second wave – data from the US is starting to prompt fear of a second wave which could weigh on sentiment and impact currency markets. Brexit “No Deal” re-emerges – the UK have declined on extending the transition deal beyond 2020. Recently PM Johnson stated that the UK would be prepared to accept an Australia-style Brexit trade deal, which is not considerably different to a 'no deal' Brexit. UK monetary policy - The possibility of negative interest rates is still not being ruled out by the Bank of England as a policy tool if the economy takes a turn for the worse. The above factors could have an impact on currency volatility as well as the supply and demand of goods. If this happens, as a business you

2020-08-12T11:41:26+00:00July 2nd, 2020|
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Brexit Trade Talks to Impact Sterling in H2

By Jamie Jemmeson ACSI, MSTA at Infinity International UK/EU trade talks seem to be echoing a similar case of déjà vu as Brexit did. Looking back at the timeline we can see a similar scenario from former Prime Minister May’s “Brexit means Brexit” and “no deal is better than a bad deal” to current Prime Minister, Johnson’s “do or die” speech, pushing negotiation right to the limit.  This resulted in a transition deal following the UK’s exit of the EU on 31st January 2020. By the end of the year, both sides need to find ways around their respective differences, reach an agreement and leave enough time to ratify as well as implement the deal in legal text. Looking at what needs to be agreed, the task ahead is enormous, below is a selection of some of the subject matters that need to be in the agreement: free-trade agreement fishing waters agreement security co-operation legal jurisdiction financial sector alignment and Northern Ireland border complications It cannot be ignored that the COVID-19 pandemic has complicated an already tense process. Leaders have been focused on the pandemic as they manage both the economic, health and social fallout. Brexit talks were reduced to video conferences, reducing the opportunity for rapport building often critical to diplomacy. The deadline to extend the the transitional agreement beyond December, expires at the end of June. The UK has rejected the prospect of an extension and has made clear. Unlike other targets, this was self-imposed as it was

2020-08-12T11:46:32+00:00June 25th, 2020|
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What Impact Could Hedging Have on Your Business?

By Jamie Jemmeson ACSI, MSTA at Infinity International This week the UK saw the reopening of non-essential retail shops, and while restrictions are being lifted the uncertainty and volatility faced by businesses remains. The current context could be an opportune time to consider the nature of the risk foreign exchange exposes your businesses to, as well as the impact of recent currency volatility, and then, against this backdrop, to re-assess the effectiveness of an existing hedging strategy. We put forward 4 questions in our introduction to the series “Points to Consider Before FX Hedging in COVID-19 Conditions”. Last week, we tackled Question 1:  “Can Your Business Identify and Understand its FX Exposure?”. This week we are going to unpack Question 2: ‘What impact could hedging have on your business?’ FX risk and the business impacted Foreign exchange (FX) poses a risk to any business with an international trade exposure, the question is how does your business manage this risk (through hedging or by other means)? The objective of hedging is to achieve certainty through fixed foreign exchange rates which can in turn protect a positive target margin. Under COVID-19 not only have many businesses experienced changes to the way they operate but many currencies have traded to extremes; for example, during the month of March, GBPUSD was more 13% lower than where it started the year as COVID-19 fears escalated. Payments to international suppliers Has the business changed its international suppliers during COVID-19 and would that allow netting of currency exposure?

2020-08-12T11:54:42+00:00June 18th, 2020|
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Can Your Business Identify and Understand its FX Exposure?

By Jamie Jemmeson ACSI, MSTA at Infinity International Last week, we published an article on “Points to Consider Before FX Hedging in COVID-19 Conditions”, where we highlighted some of the talking points when considering either implementing a new FX policy or adapting your current hedging strategy. We understand that perhaps now more than ever, risk management is a priority for businesses, which is why we will go into detail answering the 4 questions we posed, assisting business to prepare in the coming weeks and months as we re-enter the markets under COVID-19 conditions. This week we are going to unpack Question 1 in more detail: Understanding your FX exposure. Has your FX exposure changed? Are you now using different suppliers/has your customer base changed focus geographically? Depending on the sector that your business operates, your FX exposure may have either decreased or increased dramatically as result of COVID-19. Before instructing any new FX hedges, you may consider whether demand has increased due to a sudden increase due to situational demand (for example toilet roll) and whether this demand is likely to continue once supply lines and/or trends change. How has this affected your currency requirements and what does this look like over the next few months? Have you changed where the business has sourced its goods? For example, have you adapted your supply chain, sourcing goods from Europe instead of Asia? Has this changed the currencies which you are exposed to? If yes, have you considered the underlying factors

2020-08-12T11:57:51+00:00June 10th, 2020|
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Points to Consider Before FX Hedging in COVID-19 Conditions

By Jamie Jemmeson ACSI, MSTA at Infinity International Introducing the 4 questions you should start with... Prime Minister Boris Johnson announced recently that non-essential shops in England can reopen from 15 June, rates of infection permitting. This now puts businesses in the unenviable place of second-guessing what sentiment and confidence may look like and the resulting sales and inventory requirements. Business conditions remain fragile, despite a loosening of restrictions, it is unlikely to represent “business as usual” as we all continue to adapt to the ever-changing environment. With many still questioning whether a “second wave” emerges or not, makes it incredibly difficult to answer those FX hedging questions of “how much do we hedge; how long do we hedge for and when?” The key question to answer and understand is “what is the purpose of business hedging” and may now be the time as we ease out of this unprecedented crisis to re-assess some previously held views/policies. We have complied a few questions that you might wish to consider before executing a FX hedge or developing a hedging policy in these conditions. Over the next few weeks we will unpack each of the 4 questions, which are: 1. Understand your FX exposure Has your FX exposure changed – are you now using different suppliers/has your customer base changed focus geographically? Do you have line of sight on your currency requirements and what are the terms associated with your upcoming invoices? 2. What impact will hedging potentially have on the

2020-08-12T12:00:02+00:00June 2nd, 2020|
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Infinity International Client Sentiment Index: Are Things Improving?

Infinity International aim to provide content to our clients on several relevant topics covering a variety of possible concerns during these unprecedented times.  To do this, we are drawing on our own experience, client feedback as well as the input from others in our network. Last month we introduced a monthly survey, Infinity International Client Sentiment, this measure a cross section of our clients, from different industry verticals, to gauge their experiences regarding current business conditions. An index score is then formulated from the data provided. The scoring is 0-100, with 100 being the most positive. The aim of the index is to determine the following points: Emotional mindset of businesses To understand the strength of order books Plans for investment and employment in the short term Any expectations to change price strategies By running the survey on a monthly basis during these unprecedented times, we aim to track how business sentiment is changing amongst our clients (a good cross section of UK PLC) against the COVID-19 backdrop. The score for our first survey, and for the month of April was 44.28, after completing this month’s survey we have arrived at a score of 46.84, resulting in a sentiment increase of 2.55 points. Our survey asked 7 simple questions to determine the above points and produce the score. The questions and results were as follows: 1. Overall, would you describe current conditions for your business as good, middling, or bad? Last month 51% of respondents said that they consider

2020-07-10T15:28:32+00:00May 29th, 2020|
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What are the Pros and Cons of Negative Interest Rates?

By Jamie Jemmeson ACSI, MSTA at Infinity International At the start of the year many thought that negative oil prices could never materialise; in April, the world saw this come to reality with below $0 oil prices for the first time in history. Now the focus is on whether interest rates could turn negative in the UK and US. Recently, Bank of England Deputy Governor Broadbent stated that the central bank would have to consider the pros and cons of negative interest rates. During a recent webinar, BoE Governor Bailey stated that negative interest rates are not on the table now, although he also commented that it was wise not to rule anything out forever. President Trump is never shy of stating his mind, he is piling the pressure on FOMC Chair Jerome Powell. Taking to Twitter, he stated that the US should accept the "gift" of negative interest rates. With the subject matter picking up momentum it is worth reviewing the potential economic benefits and considerations surrounding negative interest rates. Theoretical benefits By charging lending banks to store their reserves at the central bank, it is hoped that lenders will be coerced into lending more of these funds. By lending money to borrowers, they will earn interest as opposed to being charged to hold their money. To encourage spending by deposit holders. During downturns, both consumers and businesses tend to hold on to their cash whilst they wait for the economy to improve. Rather than paying to hold

2020-06-22T15:08:02+00:00May 22nd, 2020|
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Future Fund: Sunak’s next steps to help business

By Jamie Jemmeson ACSI, MSTA at Infinity International Now more than ever, the focus of FDs, Treasurers and finance teams is likely to be firmly fixed on cash-flow.  As a result, you will have seen from our other Infinity International blogs and insight pieces, we’re trying to ensure we provide content to our clients on several relevant topics covering a variety of possible concerns.  To do this, we are drawing on our own experience, client feedback as well as the input from others in our network. Funding for businesses is a relevant topic and a priority through these unprecedented times. According to Deloitte’s CFO survey for April just under a third of companies are accessing the Bank’s Covid-19 Corporate Financing Facility; whilst increasing cash flow was the second highest priority over the next 12 months[1]. The Government Coronavirus Business Interruption Loan Scheme (CBILS) has already been released but is not right for every business. As a result, we have shifted our focus to the new Government lending scheme for SMEs, the Future Fund, and how it will operate. Official details were release this week with applications opening today. Understandably, the recent focus from the Government and the nation has been on the current changes in the lockdown restrictions and the milestones for further easing. I spent some time chatting to the team at Polestar CF and asked Richard Hall, a corporate finance specialist for his take on the early stages of the Future Fund. For context, Richard is a

2020-06-22T15:08:39+00:00May 20th, 2020|
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Re-framing 2020: Possible scenarios for the second half of the year

COVID-19 may have changed life as we know it. Anybody who claims that they know what happens next is speculating. In our Re-framing 2020 report, we have collated and articulated various news feeds and come up we three different scenarios that could happen, a likely, best case and worst-case scenario. This is displayed in high-level infographics to highlight the potential scenarios and outcomes including currency forecasts for each. We have also outlined four factors that are likely to be fluid throughout the remainder of the year but could have a large impact on market volatility as well as how the overall picture evolves. Download our Re-framing 2020 FX Forecast Report We’re here to cut through the clutter and industry jargon to provide you with relevant information so you can build your understanding of foreign exchange markets. This blog post is intended to provide you with information on the services Infinity International Limited (IIFX) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade. Foreign exchange rates provided therein are for indicative purposes only and are not intended to give an accurate reflection of current currency exchange rates or to predict future movements in currency exchange rates. IIFX is a company registered in England with registered number 06333730 and registered address at Third Floor, 24 Chiswell Street,

2020-09-14T10:22:25+00:00May 15th, 2020|
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Offices: changing the way we work?

By Tyler Betts: FX Risk Manager at Infinity International Working offices are rooted in history with the first ever examples found in Ancient Rome, within its very own business district.  Upon the collapse of the Roman Empire, offices were not a part of modern life until 1726 in the UK, when Thomas Ripley built the Ripley Building to house the Admiralty and bureaucrats of the Royal Navy.  This was followed by East India House on Leadenhall Street in 1729, to serve the powerful East India Company.  Both impressive buildings are still standing today! Early offices were segmented across individual rooms for each employee and only in the 1900’s did we see the advent of open plan working space, which has largely been the way we’ve worked ever since. Covid-19 has brought to light many challenges including the need to temporarily overhaul the way we work, with many organisations moving from office to home based in under 48 hours – a remarkable achievement for businesses operating exclusively from an office or on legacy technology. According to a study by Censuswide around working from home, it is claimed that “Sixty-eight per cent feel they are either more productive or equally productive from home – which is particularly significant given the unique challenges many workers face with handling childcare and home-schooling.”[1] This may be one of the reasons that Barclays CEO, Jes Staley, has said that “There will be a long-term adjustment to our location strategy,". "The notion of putting 7,000 people

2020-06-22T15:24:38+00:00May 7th, 2020|
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© Copyright | All Rights Reserved. Infinity International Ltd (IIFX) is a company registered in England with registered number 06333730 and registered address at Third Floor, 24 Chiswell Street, London, United Kingdom, EC1Y 4YX. IIFX is authorised by the Financial Conduct Authority as an Authorised Payment Institution (FRN: 567835) for the provision of payment services. IIFX is also authorised and regulated by the Financial Conduct Authority as an investment firm (FRN: 671108). The content of this website is to be used for information purposes only and should not be interpreted as advice or as a solicitation to offer to buy or to sell any currency or as a recommendation to trade. For more information, please see our terms. For information about how we process personal data please see our privacy policy.
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