Currency Management priorities for 2024

By Kantox

22/02/2024

Fears expressed in 2023 about out-of-control interest rate hikes are giving way to a more favourable outlook for 2024, fuelled by declining inflation expectations.

Introduction: Six priorities for FX risk managers in 2024

In 2024, currency managers should focus on six key priorities to enhance automation, visibility, and control, protecting profit margins and competitiveness amid increased currency usage. Today, we focus on two new top priorities which are discussed in the whitepaper by Kantox.

3. Optimize forward points

In 2024, concerns over interest rate hikes have waned due to diminishing inflation expectations. For currency managers, interest rate differentials between currencies are paramount, affecting forward FX rates through forward points. Effective management of forward points is essential for enhancing profit margins and maintaining competitiveness amidst shifting interest rate environments.

4. Optimise exposure netting

In 2024, the banking turmoil of 2023 has highlighted the enduring presence of counterparty risk, prompting continued attention to risk mitigation strategies. Exposure netting in currency management offers a solution by offsetting commercial exposures with the same currency pair, value date, and amount but different directions, resulting in reduced FX trading costs and improved collateral management, especially valuable in fluctuating interest rate environments.

What, how and why? Read it in the free whitepaper
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