Recap & Recording: Your Currency Management Toolkit for 2025

Key Takeaways

1. Importance of Data and Systems:
   • Konstantin emphasized the need for robust data management systems to evaluate exposures accurately. He stated, “You need to create a preferably automated mechanism to detect such situations… You cannot act if you don’t know.“
   • Sunny echoed this sentiment, urging companies to invest in systems and data to ensure everyone has the right information at the right time: “Invest in the system, invest in data, invest in making sure that everyone has the right information.”
2. Understanding FX Exposure:
   • Sunny highlighted the need for companies to reevaluate their FX exposure models regularly, stating, “Go back and reevaluate all your FX exposure models… Is that truly still the right way to use it?“
   • Konstantin pointed out the challenges in evaluating exposures due to data quality and availability, noting, “You need to understand for yourself what are the reasons why it changed since yesterday.“
3. Cross-Functional Collaboration:
   • Sunny discussed the necessity of collaboration across departments, particularly with accounting and procurement, to manage FX risks effectively: “It truly takes a village. It truly is a cross-functional effort.”
   • Tony emphasized that FX risk management should not be viewed solely as a treasury topic, stating, “FX risk management is nothing else than what a company needs for international resilience… you want to hold margins.”. He also warned against relying on Excel for risk management, advocating for more robust systems to handle complex data. “An Excel file is not a solid foundation for a good risk management practice… The small error costs thousands and hundreds of thousands of dollars.“
4. Avoiding Speculative Strategies:
   • Both Sunny and Konstantin cautioned against speculative strategies like carry trades for companies not in the trading business. Sunny remarked, “I would categorize that as being speculative… I think we should stay away from it.“
   • Konstantin reinforced this by stating, “As a classic corporate, you should stay as far away as possible from even thoughts about this.“
5. Long-Term Strategy and Investment:
   • Tony advised companies to think about their risk management strategies as if they had infinite resources, encouraging them to build a business case for investment: “Show what is the delta between that world of infinite resources and the current situation.”

Conclusion

The session underscored the critical need for corporate treasurers to invest in data management systems, foster cross-departmental collaboration, and maintain a clear understanding of pricing dynamics in relation to FX risks.

Panelists agreed that effective currency management is not just a treasury function but a company-wide responsibility that requires ongoing evaluation and adaptation to changing market conditions. By focusing on these areas, organizations can enhance their resilience and competitiveness in the global market.