Between the US-China trade war and the rapidly evolving domestic political picture, there have been challenges for businesses of all sizes who import or export goods and services across the world. This uncertainty is causing greater volatility in the currency market. While a fall in the US dollar may make American-made goods more affordable, there are no guarantees. The strength of the dollar may mean that imports from overseas are excellent value but currencies fluctuate based on a range of factors, so it’s difficult to plan ahead based on the current status or movements of the currency market.
Price pressures on imports
The cost of goods from overseas are currently great value thanks to a strong dollar, which means that many businesses may be enjoying a healthy profit margin. There may be an opportunity to lower prices and further increase the volume of sales, but the risk is that all of this may change. The closer we get to the 2020 election, the more volatility we may see in the value of the dollar in future. While it may be possible in the short-term to reap the rewards offered by the currency market, there are no guarantees. This is a risky strategy and may mean that if the dollar drops, profit margins will shrink or prices may have to rise sharply.
Finding a solution to price pressures
While it’s not possible to control or fully predict the movements in the currency market, there are ways to control your costs overseas without putting prices under pressure. A currency specialist can help you assess the impact of currency fluctuations on your profit margin and help you devise a strategy that helps you manage the risk. Your business may benefit from a forward contract, which allows you to fix a prevailing rate for up to two years. (Please note, a forward contract may require a deposit.) However, it’s worth noting the rate may improve, so a standing order which allows you to specify a rate higher than the current market at which to buy currency, may be of benefit. You can also specify the lowest rate at which you can exchange currency to protect your margins.
Expert currency guidance and services for businesses
If you are concerned about how the value of the dollar could have an impact on your profit margin and your product pricing, a currency specialist can help you mitigate the risk. The current environment has put prices – and businesses – under pressure but a clear currency exchange strategy can help you manage your costs in a global market. As well as offering great rates and a range of products to manage your international payments, moneycorp has expert consultants who specialize in industry sectors and take the time to understand your business.