Currency costs are causing pressure on prices

Currency costs are causing pressure on prices

Businesses of all sizes operating in global markets are finding that rising costs are squeezing the profit margin

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. 

Why use moneycorp?

Market updates to keep you informed on the currency movements

Market updates to keep you informed on the currency movements

Easy upload functionality for mass payments

Easy upload functionality for mass payments

Competitive pricing giving you access to more than 13 liquidity providers

Competitive pricing giving you access to more than 13 liquidity providers

Exchange more than 120+ currencies

Exchange more than 120+ currencies

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How our services can help you

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Foreign Exchange Solutions

Our team will work with you to identify your individual requirements and be able to suggest products including Spot Contracts, Standing Orders, Forward Contracts to meet your foreign exchange needs.

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Risk Management

Protect your business from foreign exchange market volatility, forecast cash flows and minimize risk with our range of hedging tools. 

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Payment Solutions

We provide payment solutions for businesses with local or international requirements, who are looking to simplify the process and cut on-going costs. 

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