How can Xe help your manufacturing business with its international payments and FX requirements?

08-04-2020 | treasuryXL | XE |

Xe can help businesses in the manufacturing sector to make quick international payments and prepare for currency market volatility.

How can exchange rate movements affect your business? If your business operates in multiple countries, imports or exports goods or services abroad, or deals with foreign currencies in any capacity, exchange rate movements can have a significant impact on your business’s operations and bottom line.

Let’s consider how exchange rate movements could impact manufacturers who regularly purchase products and parts. Even if the costs of these parts and products remain steady, currency values will not. The currency markets are constantly in flux, and volatility in the markets could increase the costs of your imports, or even reduce your profitability.

In addition to preparing for potential market volatility, an experienced foreign exchange and international payments provider can also provide your business with a quick, reliable and cost-effective way to make your business payments, and help you to come up with a strategy to minimize your risk exposures and effectively plan for future FX outcomes.

What can a manufacturing business do to improve its FX outcomes?

The first step is finding the right international payments and foreign exchange provider. Just as each business is different, each provider is different, and the right provider for your business will have the right tools and services to help your business craft the strategy that suits your business’s needs.

At Xe, we understand that each business has its own FX requirements. Today, we work with over 13,000 businesses of all sizes across all industry sectors and offer each one the products, services, and guidance that it needs for its operations.

We can help your manufacturing business:

  • Maintain steady importing costs;

  • Save time on your international payments with our quick and easy transactions;

  • Save money on your international payments with better rates and fees than what your bank would offer.

Learn More

What Xe can do for your manufacturing business

In addition to offering our experience and expertise to help your business craft its own foreign exchange strategy, we also offer up an array of products and services that include:

  • Spot transfers, so you can purchase currency and send your international payments quickly, easily, and “on the spot”.

  • Market orders, so you can set a target exchange rate for an automatic transfer once it’s been reached, so you can secure the rates you want for your payments that aren’t time-sensitive.

  • Forward contracts, so you can lock in today’s exchange rate and schedule a future transfer on that date and ensure that your payment will send on time and you can avoid potential market volatility.

  • Risk management, so our team of currency experts can create a customized risk management strategy for your business’s foreign exchange needs, and you can devote your time to your business.

Get Started

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multi billion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

How to get a quote for fast and secure money transfers for your business

01-04-2021 | treasuryXL | XE |

By signing up for a free Xe Business account, you can quickly and easily get quotes for fast money transfers for your business’s international payments.

Getting a quote is the first step to making a business international payment. And while it may sound simple enough, if you don’t know where to begin or who can help you get a quote, it can quickly grow overwhelming.

We understand that you might not have the time to learn all about the process before getting a quote. We’re here to make it quicker and easier for you, so you don’t have to take any time away from your business.

There are a few questions you should ask yourself first:

  • Do you know what type of payment you’ll need to make?
  • Do you know where to go to get a good exchange rate for your transfer (or even that you can shop around for rates)?
  • Are you working with a knowledgeable foreign exchange provider that can help you find the best rate and choose the right payment solutions for your business?

At Xe, we can help you with all of the above. Here’s how you can get a quote for your business’s next international payment.

Learn More

How to sign up for an Xe business account

Before you can get a quote, we’ll need you to sign up for an account so we can understand what your business is looking for. Fortunately, an account is free and signing up will take just a few minutes. We’ll ask you for some information about your business. This will vary, but these details typically include:

  • Registered business name
  • Country of registration
  • Registration number
  • Type of business
  • Nature of business

Once you’ve filled that in, we’ll then want to know some information about you. In order to create an Xe Business account, you will need to be a director. We’ll ask for:

  • Your name
  • Your title
  • Your mobile phone number
  • Your date of birth
  • Your address
  • The email address and password you’ll use to sign in.

One last step to go—we’ll prompt you to provide:

  • Where you’ll be sending money from
  • The currencies you’re expecting to send
  • How many transfers you’re planning to send.

Once that’s been submitted, one of our team members will get in touch with you, typically within the day. We’ll confirm the details you provided and, once that’s completed, you’ll be all set to start making payments.

Get Started


How to get a quote for your business

Good news! Once you’ve signed up, getting a quote is quick and easy.

  1. Sign in to your account.
  2. Select the currencies you’d like to exchange.
  3. Enter the amount you plan to send.

That’s all! The send rate and cost for your transfer will pop up automatically. If you’re happy with the quote and want to proceed with your payment, hit “New Transfer” to continue on to making your transaction.

Get Quote

We hope this has helped break the process down for you. If you have any questions or need additional assistance with your payments, you can also contact our team by phone or by email.

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multi billion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

Xe-pert Webinar | What could happen to USD and GBP in 2021?

26-03-2021 | treasuryXL | XE |

Given the new US presidential administration and the development of COVID-19 vaccinations, market participants are wondering what’s in store for the USD in 2021.

In the latest free 45-minute webinar bought to you by Xe and BritishAmerican Business, our experts will discuss:

  • Recent performance of USD and GBP
  • Risk-aversion trading theme versus market fundamentals
  • How the China / US relationship is heading and how this could impact USDCNY throughout 2021
  • What we could expect throughout the remainder of 2021 and different scenarios that could have a positive or negative impact on USD and GBP
  • A summary of the type of solutions you can look to implement to protect your business from further impact

Join the currency experts from Xe as they share their thoughts on the current market outlook and how businesses that have a commercial exposure to the currency markets can look to protect their bottom line from further impacts and protect against uncertainty.

Register now and submit your questions, and our experts will also look to answer the common challenges during the live session. We may not have all of the answers, but we can look to provide some support to issues regarding currency exposure.

Date and Time

April 22nd 2021, 5:00-5:45 PM CEST

Register Here

About Xe for Business

Xe provides comprehensive international money transfer and currency risk management (hedging) solutions. Our team of foreign exchange specialists work with UK businesses of all sizes to improve their FX outcomes.

How to get started

Signing up for an Xe Business account is completely free, and will take just a few minutes. Interested in learning what the process entails? Contact our expert Maurits Houthoff for quick and transparant information.

 

Hoe kunnen bedrijven hun bedrijfsresultaten beschermen tegen de valutamarkten? (Dutch item)

25-03-2021 | treasuryXL | XE |

Komt uw bedrijf in aanraking met vreemde valuta? Wybe Schutte legt in onderstaand interview uit hoe bedrijven de complexiteit van FX kunnen aanpakken.

Maak kennis met…

Wybe Schutte is Head of Business Development Europe bij Xe. Wybe’s carrière is altijd gericht geweest op internationale bedrijfsontwikkeling en het beheren van relaties. Binnen XE spelen beiden een belangrijke rol, aangezien Xe wereldwijd de vertrouwde partner zijn van veel bedrijven en hun helpen bij het beheren en verminderen van het risico die gepaard gaan met internationaal zakendoen en valuta’s.

INTERVIEW

1. Kun je iets vertellen over Xe en haar missie?

Bij Xe draait alles om valuta’s. De meeste mensen kennen Xe van de “Currency Converter”, maar we bieden al meer dan 25 jaar internationale betalingsverkeer diensten aan voor bedrijven. Xe’s Business Solutions ondersteunt bedrijven die in aanraking komen met vreemde valuta door hun te ondersteunen bij het beschermen van de winstmarges, en het verbeteren van de cashflow. Dit onder andere door het valutarisico waarmee ze worden geconfronteerd te kwantificeren en door strategieën te implementeren om dit te beperken. Zodat onze klanten zich kunnen concentreren op hun corebusiness en zich geen zorgen hoeven te maken over hun FX.

2. Welke soorten valutarisico’s zijn er en hoe gaat XE ermee om?

Binnen elk bedrijf kijken we waar de valutarisico’s zitten en hoe we deze risico’s kunnen beperken. Waarbij er verschillende opties zijn voor bedrijven om bescherming te bieden tegen het risico, zoals termijncontracten. Valutarisico kan worden onderverdeeld in drie soorten: 1) Transactie risico, wanneer een bedrijf zaken doet in een land dat verschilt van de basisvaluta; 2) Translational risico, wanneer een bedrijf een activa of passiva in een vreemde valuta op de balans heeft staan, en 3) Economisch risico waarbij een verandering in de wisselkoers een bedrijf een concurrentievoordeel kan geven in de markt.

3. Hoe kan je de verschillende soorten valutarisico’s meten?

FX-risico kan een negatieve of positieve invloed hebben op de bedrijfsresultaten. Als je terugkijkt op de afgelopen 10 jaar, valt er te zien wat de potentiële impact zou kunnen zijn in de meest extreme, minst extreme en gemiddelde scenario’s op een gegeven tijdlijn.
Dit kan worden gedaan door te kijken naar de hoogte- en dieptepunten van de markt en de valutapositie van een bedrijf. Deze stap helpt bedrijven te begrijpen wat de impact op het bedrijfsresultaat kan zijn.

4. Wat zijn de meest voorkomende kritieke FX-problemen die bedrijven hebben?

Bedrijven die een transactionele risico hebben, kunnen een onderscheid maken tussen gecommitteerde of verwachte blootstelling aan valuta risico. Een gecommitteerde blootstelling is wanneer de prijs voor goederen of diensten in een vreemde valuta bekend en gecontracteerd zijn. Hierdoor heeft elke wisselkoersschommeling een directe impact op hun winst of kosten, tenzij ze worden afgedekt. Een verwachte blootstelling is wanneer een bedrijf een inschatting maakt om te zien wat hun vereisten kunnen zijn. De betrouwbaarheidsniveaus in de voorspelde perioden kunnen sterk variëren en het is normaal gesproken zo dat hoe groter de periode, hoe lager de betrouwbaarheidsniveaus.

5. Hoe kunnen bedrijven hun bedrijfsresultaten beschermen tegen de valutamarkten?

Er zijn een aantal belangrijke stappen die een bedrijf kan volgen om de FX-volatiliteit te verminderen. De eerste is het type risico te identificeren om daarna de risico-elementen te kwalificeren en vervolgens een strategie te ontwikkelen en deze tijdens het implementatieproces te implementeren. In deze fases kunt u beslissen welke producten het meest geschikt zijn, zodat u vervolgens over kunt gaan op markttiming en uitvoering. Ten slotte moet u uw aanpak regelmatig analyseren, herzien en aanpassen. Het is belangrijk om te onthouden dat het niet om marktspeculatie gaat, maar om het beperken van uw risico.

6. Wat is volgens jou het grootste voordeel van een werkende FX strategie?

Gezien de altijd onzekere wereld waarin we momenteel leven, kunnen financiële afdelingen en treasury teams op zoek zijn naar een strategie om met deze valutaschommelingen om te gaan. Een strategie die na verloop van tijd een aanzienlijke invloed kunnen hebben op de bedrijfsresultaten van een bedrijf. Een gestructureerde benadering van valutarisico’s kan een bedrijf in staat stellen om strategische beslissingen te nemen, in plaats van te proberen in te spelen op de dagelijkse ontwikkelingen in de markt.

7. Ervaar je verschillen in FX vóór COVID19 en de tijd waarin we nu leven? Wat zijn de verschillen?

Er hebben zich aanzienlijke bewegingen voorgedaan op de valutamarkten tijdens de Covid19-periode en er zijn nog steeds veel factoren die de dagkoersen beïnvloeden. In deze onzekere tijden zijn onze opdrachtgevers op zoek naar zekerheid en stabiliteit. En hoewel prijs altijd belangrijk is, werden andere sleutelfactoren zoals veiligheid en geloofwaardigheid belangrijker. Uiteraard was de impact op onze klanten heel verschillend en we hebben met hun samengewerkt om de oplossingen en flexibiliteit te bieden die ze nodig hadden. We hebben veel nieuwe klanten verwelkomd uit nieuwe industrieën terwijl ze groeiden, en we ondersteunen nieuwe en bestaande klanten die groeiden, het lastig hadden, of hun bedrijfsmodellen aanpasten aan de veranderende markt.

8. De markt verandert voortdurend, hoe blijft XE op de hoogte van de laatste ontwikkelingen in de valutawereld?

We werken nauw samen met onze klanten om hun behoeften continu te begrijpen en hierop aan te passen. Onze deskundige dealers houden de markt nauwlettend in de gaten. Inzicht in de bewegingen, weerstandsniveaus en belangrijke economische en politieke updates die de markt kunnen beïnvloeden zijn erg belangrijk, en we houden die in de gaten zodat onze klanten zich daar geen zorgen over hoeven te maken. Xe werkt ook nauw samen met onze zusterbedrijven en moederbedrijf Euronet Worldwide.

9. Hoe ziet de toekomst van FX er in jouw perspectief uit?

De nabije toekomst zou het hoofd kunnen bieden aan buitengewone niveaus van balansuitbreiding en recessie, wat mogelijk zou kunnen leiden tot een langer stimulerend/ expansief monetair beleid dat op zijn beurt de valutakoersen van de landen die ze dragen, zou kunnen drukken. De gevolgen hiervan op de korte tot middellange termijn zouden een gebrek aan grote economische expansie kunnen zijn, aangezien het kapitaalrendement vaak negatief is wanneer de inflatie wordt meegerekend. Dit kan betekenen dat we een herschikking van de FX-sterkte zien naar op commodity based valuta’s (CAD / AUD / NZD) en alternatieve veilige havens (CHF). We zouden deze verschuiving echter op langere termijn kunnen zien, aangezien met name de overheidsschuld houdbaarder en aantrekkelijker wordt tegen zulke lage rentetarieven en bredere investeringen zou kunnen uitnodigen voor landen en tot op zekere hoogte de particuliere industrie.

We zijn getuige geweest van een grote volatiliteit in de FX-markt door een grotere afhankelijkheid van een smallere data kern. Inflatie en rentetarieven, maar ook verhalen over de overheidsschuld en de uitbreiding van de balans hebben de meeste invloed op de renteschommelingen.

10. Wat is tot nu toe jouw beste ervaring ooit in de wereld van valuta’s?

Een scale-up ondersteunen met hun complexe FX-vereisten en hen in staat stellen hun bedrijf in een korte tijd te laten groeien door het FX-risico te elimineren en gaandeweg aanzienlijke kostenbesparingen te realiseren.

 

Meer over XE

Bij XE draait alles om Valuta. We bieden een uitgebreid portfolio van valutadiensten en -producten aan, waaronder onze valutacalculator, marktanalyses, valutagegevens-API en snelle, gemakkelijke en veilig betalingsverkeer voor consumenten en bedrijven.

XE faciliteert wereldwijd meer dan 13.000 bedrijven per jaar bij het beheren van hun vreemde valuta en het vooruit plannen om de risico’s van valutaschommelingen te beperken.

XE is onderdeel van Euronet Worldwide (EWI), een aan Nasdaq genoteerde wereldwijde aanbieder van elektronische en transactie verwerkingsoplossingen met een marktkapitalisatie van ongeveer 7,5 miljard dollar.

XE Business Services

Internationale betalingen en beheer van valutarisico’s van ‘s werelds vertrouwde autoriteit op valutagebied. De concurrentie voorblijven is al moeilijk genoeg zonder de complexiteit van vreemde valuta. XE kan u helpen tijd en geld te besparen, zodat u kunt blijven doen waar u goed in bent: uw bedrijf runnen. Onze oplossingen bieden u zekerheid in een onzekere wereld en stellen uw bedrijf in staat om de juiste beslissingen te nemen.

Bezoek XE.com

Lees XE blogs

 

 

How businesses in the healthcare & medical industry can improve their FX outcomes

18-03-2021 | treasuryXL | XE |

Having a secure, reliable and cost effective international payment provider as well as the tools and expertise available to support you to weather market volatility is crucial.

Any business that deals with foreign currency, no matter the size or the industry, has the potential to be impacted by the ups and downs of the foreign currency markets. A change in exchange rates from one day to the next could potentially increase importing costs, increase capital expenditure costs, or increase overseas investment costs.

If you are a business in the healthcare and medical industry, preparing for market volatility and knowing how to respond to shifts in currency values is critical. Otherwise, you could end up paying more than you projected on goods or services, which can have a detrimental impact on your bottom line.

Whether you’re importing medical devices and distributing them to local pharmacies or healthcare providers, or purchasing chemicals as part of the medicine production process, having a secure, reliable and cost effective international payment provider as well as the tools and expertise available to support you to weather market volatility is crucial.

How can your healthcare business address foreign currency risk?

Working with a knowledgeable, experienced foreign exchange provider is the first step to safeguarding your business against ups and downs of the currency markets. No one can predict the future, but an FX provider can help you prepare for potential volatility, and will have the tools and guidance to help you respond in the event of unexpected shifts.

Opening an Xe Business account will allow you to take advantage of our full suite of products and services, so you can:

  • Protect costs for imports;

  • Save time through accurate forecasting and quick and easy payments;

  • Save money with cheaper rates and no fees (compared to banks).

Learn More

How can Xe reduce foreign currency risk for your business?

We understand that no two businesses are the same. We work individually with each business in order to identify where their needs lie and what their risk exposures are, and develop an international payments and risk management strategy tailored to their operations.

We offer a range of products and services, including:

  • Spot transfers. Purchase currency and send your international payment at the current rate. If you need to make a quick payment, you can do it on the spot in just a few minutes.

  • Market orders. Identify a target exchange rate, and we’ll initiate your transfer when that rate is reached. If your payment isn’t time-sensitive, you can avoid potential volatility in the future.

  • Forward contracts. Lock in today’s exchange rate and send the payment on a set future date. If you have an upcoming transfer and don’t want to worry about the markets fluctuating, take care of it now for peace of mind later.

  • Risk management. Don’t have the time or the resources to devise a risk management strategy on your own? With our 25 years of experience in the currency markets and dedicated team of currency experts, we can help you to strategise the right one for your business.

How to get started

Signing up for an Xe Business account is completely free, and will take just a few minutes. Interested in learning what the process entails? Contact our expert Maurits Houthoff for quick and transparant information.

How can Exchange rate movements affect your business?

11-03-2021 | treasuryXL | XE |

If your business works with international currencies, your business could be impacted by exchange rate movements.

Does your business:

  • Make income from overseas operations?
  • Import or export goods and services from abroad?
  • Pay overseas invoices?
  • Or interact with foreign currencies in any way?

If so, your business can be impacted by exchange rate movements. Whether you’re a sole proprietor or a large corporation, in manufacturing or healthcare, you will face some level of foreign exchange risk when making international payments.

What is foreign exchange risk?

It’s exactly what it sounds like: it’s the possibility that a business’s financial position or performance could be negatively impacted by fluctuations in exchange rates in the foreign currency markets. As the saying goes, the markets never sleep. Exchange rates are prone to fluctuations at any given moment, and while experts can forecast where they think currency values might go, you can’t predict where the rates could go—or what it could mean for your business. Let’s take a look at a few examples.

How does a falling domestic exchange rate affect your business?

A falling domestic exchange rate can:

  • Increase costs for importers and potentially reduce their profitability.
  • Make domestically produced products more competitive against imported products.
  • Increase the cost of capital expenditure (for example, if it includes the importation of capital equipment).
  • Increase the cost of servicing foreign currency debt.
  • Improve exporter competitiveness.
  • Make a business a more attractive investment proposition for foreign investors.
  • Increase the costs of investing in overseas operations.

How does a rising domestic exchange rate impact your business?

On the other hand, a rising domestic exchange rate can:

  • Make exports less competitive, reducing exporter profitability.
  • Decrease the value of investment in foreign subsidiaries and monetary assets (when translating the value of such assets into the domestic currency).
  • Reduce foreign currency income from investments.
  • Reduce the cost of foreign raw materials, giving importers a competitive advantage.
  • Reduce the value of foreign currency liabilities and hence the cost of servicing these liabilities.
  • Reduce the cost of capital expenditure (for example if it includes the importation of capital equipment).
  • Make a business less attractive to foreign investors.

Did you notice anything? No matter which direction the exchange rate is moving, it could have the potential to impact your business—and your bottom line.

How can you protect your business from market volatility?

No one can predict how the markets will move, but a knowledgeable FX provider can give your business the guidance and solutions to help you to make informed decisions to minimize the impact of market motion.

Are you curious to know more about XE?

Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

What can we expect from the Pound in 2021?

04-03-2021 | treasuryXL | XE |

The Pound has just recently hit its highest rate against the USD since April 2018. In our forecast, we’ll discuss what we anticipate for the Pound in the coming months of 2021.

The United Kingdom has outstripped other major world economies when it comes to the vaccination rollout and the Bank of England seems to have delayed the potential for negative interest rates, boosting the market’s demand to buy Sterling. However, there is more to consider than just these two obvious factors.

The Pound, at a glance

What’s impacting the Pound right now?

  • The Bank of England stated it expects the UK Economy to “recover rapidly” once out of lockdown.

  • UK consumers have built up around a whopping £154B in savings—signifying pent-up demand when the economy is back open for business.

  • COVID-19 cases are dropping, and vaccinations are increasing.

  • Governor Bailey appears to be ready to buy bonds in stimulus.

  • The furlough scheme does appear to be capping unemployment rates.

These points allude to the potential for a U-shape recovery out of the COVID-19 pandemic recession for the UK.

Compare to the sharp fall experienced at the outbreak of the virus, where we saw the UK economy drop a whopping 20%, which was then followed by a period of flat or marginal changes and ultimately a sharp increase in economic growth.

The Pound, in review

Looking back in recent history, the Sterling Index shows the incredibly negative impact the EU referendum result had on the value of the Pound against a basket of currencies since 2016.

GBP to USD, 2011-2021

Line chart illustrating the Pound sterling to US dollar exchange rate between February 2011 and February 2021.

GBP to Euro, 2011-2021

Line chart illustrating the exchange rate from Pound sterling to Euro between February 2011 and February 2021.

The currency has not recovered to pre-referendum levels against its major counterparts. The sheer uncertainty and political instability in the United Kingdom has been the constant “grey cloud” hanging over the Pound. Accordingly, the number of short positions on the Pound and lack of desire to hold Sterling in a portfolio of currencies has left it out in the cold.

In March and April of 2020 this lack of desire to hold Sterling was amplified when the world’s risk propensity changed and investors and traders alike sold out of anything considered risky—be it the Pound, stocks or even gold—and into the traditional tried and tested safe haven of the US dollar. Sterling traded at its lowest levels since 1985 against the dollar and worst level against the euro since the financial crisis in 2008.

Asset allocation of portfolios added to this sale of GBP as investors sold traditional stocks listed on the London Stock Exchange and bought the tech stocks listed in the US during the initial phases of the pandemic.

However, markets again proved that they can get used to, or price in anything over time, and with lockdowns being eased the Pound stabilised and recovered some of the ground it had lost during the panic buying of US dollars.

The next major event risk was the Brexit deadline of the 31st December 2020, which Prime Minister Boris Johnson promised to deliver and refused to extend. This hampered any upward movement for the Pound and still hamstrings the currency today.

We did however see a Brexit deal agreed and a level of certainty arrive for the UK economy in the short term. Subsequently Sterling managed to make some gains against the euro and US dollar.

So, what has 2021 been like so far and what could happen next?

The markets want the answers to these major questions:

  1. Will the economy open sooner due to the vaccination rollout out, and

  2. Will this be before other global economies?

  3. How long will it take before consumers start spending those savings stored up during 2020 to get the wheels of the economy turning again?

  4. What will be required from the Monetary Policy Committee in terms of stimulus?

With new multi-year highs for GBP against the US dollar during the second week of February, it would seem markets believe, for now at least, that the UK can get going again and ahead of other economies. If the economy does start moving forward, will it be a “rapid recovery” like the Bank of England said it could be?

This has therefore pushed back the prospect of the Bank of England cutting interest rates to negative from May (some forecast) to August.

Things to watch out for and monitor in the near future:

  • Changes or delays to the vaccination roll out program

  • Effectiveness of the vaccinations to new variants/mutations of the COVID-19 virus

  • End to, or extension of, the UK national lockdown

  • The budget speech from Rishi Sunak on March the 3rd, specifically with regard to:

    • The health of the economy

    • Furlough scheme status/extension and its potential impact on unemployment

    • Tax rises to try and start paying for the pandemic relief

The Pound, in summary

The Pound has started stepping out of the shadows of the Brexit uncertainty and looks to be riding the wave of the vaccination rollout. However, there are a number of potential dangers to this, be it final Brexit deal negotiations on financial services or longer lockdowns due to new variants to the virus.

It could be a good opportunity for Sterling sellers currently and would seem prudent to take advantage of this for short-term committed exposures you face in foreign currency.

Are you curious to know more about XE?

Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

What’s in store for the US dollar in 2021?

25-02-2021 | treasuryXL | XE |

In the opening weeks of 2021, the US dollar has seen a bout of strength. But how will the value of the dollar fare in the coming months? In the XE forecast, they will tell you what they think.

At this time, the onset of 2021 has brought a bout of US dollar (USD) strength. The USD Index has risen 2.2% from its 34-month low set on January 6th. This recent strength is a major contrast with the -15% performance the USD experienced over the prior nine months.

USD at a glance

What’s impacting the dollar right now?

  • Unemployment fell to 6.3% today from 6.7% last month.

  • The US Treasury bond yield curve is upward sloping and at higher interest rate levels, pointing toward a continued recovery.

  • The IMF, Goldman Sachs and other large investment firms are calling for a boom 2nd half to 2021.

  • COVID-19 cases have fallen dramatically in the US this week, and Johnson & Johnson is about to announce their vaccine.

These data points all hint towards positive US economic growth as 2021 continues.

Given the new U.S. presidential administration and the development of COVID-19 vaccinations, market participants are wondering what’s in store for the USD in 2021. To answer this question, it’s important to first review the dollar’s recent history.

The US dollar in review

From 2011 to early 2020, the dollar appreciated nearly +28% as global investors flocked to the US markets to buy US assets and participate in the booming US economy. This dollar uptrend held despite then-President Trump’s efforts to talk down the dollar, as higher US treasury yields and continued equity market returns kept the dollar firm.

Then COVID-19 struck in March 2020, changing everything.

The dollar initially sank in sympathy as global equity markets began to unravel. However, once the magnitude of COVID-19’s economic impact became more apparent, a new market “risk aversion” theme took hold. Investors quickly bailed on risky assets and flocked to USD-denominated “safe-haven” assets en masse, believing they would be more likely to maintain their value and hold steady even as financial markets crumbled.

In just two weeks, this mad dash into safe-haven USD assets spiked the USD Index +7.5% and left the USD with an artificial “risk aversion” premium built into its value from its perceived low uncertainty.

It has been this risk-aversion premium that then most influenced the USD’s 2020 USD trading.  For the prior nine years, traders had bought USD on good investor news to invest in US assets In the new COVID-19 world, traders did the opposite, selling USD on good market news.

Why?

Because traders were already overweight US assets and even more so with the newly purchased safe haven assets. So, as 2020 unfolded and the investment climate improved due to central bank and government actions, the need for safe-haven assets diminished and traders began unwinding these positions.

And, with this, the negative equity market correlation was born, and flipped risk-on and risk-off its head.

Ordinarily, the value of USD assets would rise in conjunction with increased market optimism (risk-on), and uncertainty or negativity would drive investors to sell their riskier assets in favor of safer ones (risk-off). Good news for investors would mean good news for the dollar, and the same with bad news.

Now, good news for investors was bad news for the dollar, and bad news for investors was good news for the dollar.  Economic fundamentals didn’t matter.

This theme held strong for the remainder of 2020. If US stocks went up (and they did!), then the USD would fall (and it did!). It was virtually guaranteed.

What’s going to happen in 2021?

To answer that question, we’ll need to consider two key questions.

  1. Will 2021 be a continuation of 2020’s risk-aversion trading theme?

  2. Will traders conclude that the USD risk-aversion premium has been wiped out and it is time to start trading off market fundamentals?

Up until this week, 2021 FX trading was looking just like 2020. Post-US election equity markets surged on the elimination of election risk, positive vaccine news and the idea of a large US fiscal stimulus package. Unsurprisingly, the USD fell -6%. And on January 6th, after the storming of the US Capitol, when uncertainty was reintroduced to the markets, the USD rose 2%.

So, what will it be for the dollar going forward? It depends on whether or not you believe the risk-aversion trading scenario will continue.

  • If you do believe this, then you likely believe the US dollar will continue to depreciate as global equity markets continue to move higher.

  • If you don’t believe this, then you believe the worst of the pandemic is over, traders have priced out the “risk-aversion premium” to the dollar, and that the USD will trade on fundamentals again—meaning good economic data and continued equity market returns will strengthen the USD.

In conclusion?

Should 2020’s risk-on and risk-off trend reverse, we will see a strong US dollar. The IMF recently raised the US’s 2021 GDP forecast to 5.1% from 3.1%, which was an outlier to the EU.

Additional vaccines coming onto the market could boost confidence, as would an additional fiscal stimulus package. The US could see unleashed economic growth in the second half of 2020, continuing to draw global capital.  Additionally, some currency moves may have gone too far, and natural flows will come back to the USD and US markets.

If February’s first week of trading is any indication, it looks like 2020’s negative correlation has broken as both the dollar and equity markets rallied in sync.

Are you curious to know more about XE?

Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

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Who sets the rates? Common questions about currency exchange rates

18-02-2021 | treasuryXL | XE |

Ever wondered where the rates come from, and how they can impact you?
We answer some common questions in this guide to exchange rates.

Who’s in charge of setting currency exchange rates? If you’ve ever sent money overseas or checked the rates, this is a question that may have definitely crossed your mind. Who decides what is the value of money, and why do rates fluctuate that much during the day?

It’s normal to wonder, and fortunately for you, we’ve got the answers to those questions and more.

How do currency exchange rates work?

Every country in the world has its own currency, and each of these currencies is valued differently. When you exchange one currency for another, you’re actually buying money, just in a different currency than the one used in your country.

The exchange rate tells you how much the currency used in your country is worth in foreign currency. The rates constantly change for some countries, whereas others use fixed exchange rates. As a rule of thumb, a country’s social and economic outlook is the main factor that influences the currency exchange rate.

That’s the quick answer. If you’re in the mood for a more in-depth look, check out our previous blog post.

What are the main types of exchange rates?

The main types of rates are variable (or flexible) and fixed rates.

Most countries have variable currency exchange rates, which are determined by the foreign exchange market. Because these rates are flexible, they fluctuate every minute, often influenced by market movements, political events, economic forecasts, and more.

Countries such as the U.S., the United Kingdom, Canada, Japan, and Mexico all use flexible exchange rates. It’s important to note that even though government policies can influence currency exchange rates, the government can’t actually regulate them. The rates are always determined by Forex traders on the foreign exchange market.

Several countries use fixed currency rates, and that is because the government dictates when the rates change. This is the case for the Saudi Arabian riyal, for example. The fixed rates are pegged to the U.S. dollar, and the central bank in the countries that use this system holds U.S. dollars to keep the rate fixed.

How do forex traders establish currency exchange rates?

The market forces of supply and demand are the main factors that determine currency exchange rates. The level of demand for a currency determines its value in relationship with other currencies. For example, if the demand for British pounds by Americans increases, the supply-demand forces will cause an increase of the British pound’s price in relation to the dollar.

The exchange rates between two countries are affected by countless factors, both geopolitical and economic. Some of the most common of them include:

  • Inflation reports

  • Interest rate changes

  • Gross domestic product numbers

  • Unemployment rates.

Forex traders take all these factors and more into account when establishing currency exchange rates. If a country has a strong economy that’s growing, investors will be interested in buying its goods and services, which means that they’ll need more of its currency.

On the other hand, when a country has an unstable economy, investors will be put off and less willing to invest, which means that the currency will not be highly valued. Investors always want to make sure they will get paid back before deciding to hold government bonds in a particular currency.

How do exchange rates affect you?

The value of money affects every individual on a daily basis, as the prices of essentials such as groceries and gas at the pump are correlated to it. When the value of money declines steadily over time, it causes inflation, and the result of that is a price increase for everything, including basic goods.

If you’re traveling or making a payment to another country that uses a different currency, it’s important to check for exchange rate values and plan your finances accordingly. Many people check whether the currency of the country of their destination is strong or weak before booking a vacation. That’s because a weak currency in the destination country means that you can buy more of it with your own currency, so you have more money to spend on your trip.

How can you get the best rates when sending money overseas?

As we’ve said before, unfortunately there’s no specific time where you can guarantee you’ll get a great rate. But there are a few things you can do to help yourself out.

If you’re transferring money to someone in another country, you need to look carefully at your options, as some transfer methods are more expensive than others. For example, if you’re using your bank to make a transfer, you’ll often need to pay a fee on top of the exchange rates set by the bank, which are usually disadvantageous.

By using an online money transfer service such as Xe, you can save money on fees and get great exchange rates. Your money will also reach its destination faster, and the entire process of making the transfer is easy both on the website and the mobile app.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

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How do Foreign currency exchange rates work?

11-02-2021 | treasuryXL | XE |

Ever checked the rates and wondered what’s happened to give you the rate you see? Here we break it down for you—and try to make it as simple and painless as possible.
If you’re traveling abroad for a holiday, need to pay for a school fee in another country or you want to buy an item from a foreign country,  you will need a currency exchange to carry out your transaction. But how can you tell the exact amount your currency is worth when it is exchanged into a foreign currency? And who’s setting them?

For the first question, you can easily do that on Xe’s Currency Converter. The second question? That’ll take a little more time to understand. We’ll try to make it as quick (and painless) as possible for you!

Currency exchange rates: what they are, and how they work

Exchange rates indicate how much your currency is worth if exchanged into a foreign currency. For example, on December 30, 2020, 1 U.S. dollar was equal to 0.748067 British pounds.

Currency exchange transactions happen 24 hours a day, seven days a week in a market that transact over $6 trillion a day. Exchange rates are constantly fluctuating as foreign currencies are actively traded. Various trading activities boost or lower the values of different currencies.

Institutions and traders buy and sell foreign currencies in the global market 24 hours a day. For a trade to be completed, at least one currency must be exchanged for another. For example, in order to buy the U.S. dollar another currency is required for payment. Whatever currency is used, either the euros, yen, or Canadian dollar, etc. will create a currency pair. For example, if you use U.S. dollars (USD) to buy the Japanese yen, the exchange rate will be for the JPY/USD pair.

How are international exchange rates determined?

Foreign exchange rates are determined in various countries using two key methods: flexible and fixed rate. While flexible exchange rates are constantly changing, fixed rates hardly ever change. (Though you probably figured that out from their names.)

Flexible exchange rates

The foreign exchange market or forex determines most currency exchange rates. These rates are known as flexible exchange rates. These rates are constantly changing from one moment to the next. Flexible exchange rates are influenced by the open market through demand and supply on world currency markets. As such, if the demand for a specific currency is high, the value of such currency will most likely increase. But if the demand of a particular currency falls, its value in the foreign exchange market falls too.

Most major global currencies often have flexible exchange rates. These include the British pounds, Mexican pesos, European euros, Japanese yen, Canadian dollars, and others.

The government of these countries and their central banks do not interfere to keep their exchange rates fixed. Though their policies can affect rates in the long run, for most of these nations their governments can only impact and not regulate exchange rates.

Fixed exchange rates

Countries that use fixed or pegged foreign exchange rates do so via their central bank. These countries set their rate against another major world currency like the United States dollar, euro or yen.

To regulate and maintain the fixed exchange rate, the government of these countries buy and sell their own currency against the foreign currency to which it is pegged. Only the governments of these countries can determine when their foreign exchange rates should change.

Countries that use the fixed exchange rate method include Saudi Arabia and China. These countries ensure that their central banks have sufficient amounts of money in their foreign currency reserves to determine the amount their currency is worth in the foreign exchange market.

Okay, but what causes the rates to change?

Rates change when currency values change. There are several key factors that affect the movement and values of local and foreign currencies. These include three key factors known as:

  1. Interest rates

  2. Money supply

  3. Financial stability

Due to these factors, the demand for a particular country’s currency, depends on what is happening in that country.

Interest rates

The interest rates a country’s central bank is setting is a key factor that will influence the country’s exchange rate. Higher interest rates have positive impacts on the value of the country’s currency. Investors are more likely to exchange their currency for one with higher interest rates, and then save it in that country’s bank to benefit from the higher interest rate.

Money supply

The money supply made available by a country’s central bank can influence the value of the currency in the foreign exchange market. For example, if there is too much money in circulation, there will be too much of it in exchange for very few goods.

Currency holders will most likely bid up the costs of goods and services which will trigger inflation. In the event that too much money is printed and in circulation in a particular country, it triggers hyperinflation and drives down their currency value in the foreign exchange market. Cash holders prefer to invest in countries with little or no inflation.

Financial stability

The financial stability and economic growth of a country can affect its foreign exchange rates. Investors are more likely to buy goods and services from countries with a strong and growing economy. This means they will need more of such a country’s currency to buy from them. this will increase the demand for such currency and ultimately boosts its value in the foreign exchange market.

If the economy of the country is in a bad shape, investors are less likely to trade with them. Investors are only interested in trading with countries that can provide gains from holding government bonds in that currency.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

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