Think Smart, Act Globally

Having a global outlook is a vital attribute for business leaders argues Carl Hasty, Head of Trading with Smart Currency Exchange.

The issue of management and leadership – a subject which, I think we would all agree, is critical to the fortunes of the national economy - often comes down to the question of what makes a good leader. For my own part, I firmly believe one of the most important attributes for business leaders of the future will be the ability to think globally.

Now, you don’t need to be Einstein to figure out why I should draw such a conclusion. Figures from earlier in spring showed that the UK had once again slipped back into recession. Indeed, since mid-2008 the UK has had seven quarters of GDP growth – compared with nine quarters of GDP contraction.

On the face of it, then, these are worrying times, particularly given ongoing unrest in the Eurozone. And yet, there is a world of opportunity out there. At Smart Currency we work with hundreds of exporters who see the world – not the UK – as their market. They think in global terms and their leaders and management teams have a global vision.

So is now a good time to export? In my opinion, there’s never a bad time to be exporting. Question - what do the following countries have in common: China, Qatar, India, Iraq, Estonia, Turkey, Saudi Arabia, Indonesia, Hong Kong and Singapore? The answer is that these are just a few of the 70-plus countries whose GDP growth rate exceeded 5 per cent in 2011.

Clearly, the global market offers opportunities for firms around the world. My overriding point here is that it is easy to get caught up with the doom and gloom engulfing the UK economy and, in the process, lose sight of the fact that many parts of the world are developing fast in all manner of business sectors.

Currency strategy

While I am all for thinking globally, I would add that any business embarking on an international strategy right now needs to have a currency strategy in place. The uncertainty of the global economy has led to volatile exchange rates in recent times. Sterling has moved markedly against the euro and US dollar of late. For exporters without a currency strategy, movements in sterling’s relative value will prove costly.

At Smart, we can help your business develop a robust currency strategy in order to negate the currency fluctuation risks associated with international trade. Smart adopts a range of techniques such as forward and spot contracts to provide stability to those engaged in international trade. We also help exporters to maximise margins by offering significantly better-than-bank currency exchange rates.

We expect more currency swings in the next few months as the Groundhog Day scenario that is the Eurozone crisis rumbles on. By partnering with Smart you won’t need to worry about currency movements and their impact on your foreign contracts, and can instead focus on developing your business beyond the shores of the UK.

To ensure you’re getting the best information on FX, get a risk strategy in place. Smart Currency Exchange can help you do this in one phone call. Call us now on 020 7898 0500 or visit our site at www.SmartCurrencyBusiness.com

Casa Mining strike gold with Smart

Casa Mining are a leading mineral exploration company controlling large-scale projects in the Democratic Republic of Congo and Mozambique. Their primary activity involves scouting out areas to conduct exploration programmes in search of gold and other valuable minerals.

With suppliers and employees spread across Europe and Africa, Casa Mining are constantly dealing with transactions in a number of currencies including euros, sterling, Canadian dollars and South African rand.

Having grown concerned over the poor exchange rates offered by their bank, Financial Director Eoin O'Driscoll was urged to check out Smart Currency Exchange. The difference he discovered was startling. “Smart conducted an analysis of the rates that we were getting through our bank and compared it against what we would be getting if we were using them. I had never imagined we could make such a big saving. I now regularly perform comparisons and Smart's rates are consistently the best”.

As well as the competitive rates offered by Smart, it was the ease with which each transaction was made that appealed to Eoin: “Being able to deal with our transactions over email and on the phone has freed up valuable time to concentrate on other areas of the business. The main draw of Smart is the rates, but the fact that it makes our life so much easier is a fantastic added bonus”.

Eoin went on to explain how the personal service offered by Smart Trader, Siobhain Barry improved the service: “Siobhain's service has always been exemplary. Having one broker assigned to you removes any of the apprehension that you feel when transferring large sums of money. Having a face to put to the company, rather than just a website or a call centre, helps a great deal and gives you complete confidence when doing business”.

When asked to sum up Casa Mining's dealings with Smart, Eoin was happy to elaborate: “The service received is fast, efficient and pain free but by far the most important factor for us is the significantly better rates that we are offered. These don't just make a small difference to our business, they save us real money. On a typical year they save us between £20,000 – £25,000”.

It is clear that managing your foreign currency exposure effectively is a vital requirement of any business that deals internationally. For more information and to see how Smart Currency Exchange can save you money, get in touch with the team on 0207 898 0503.

Focus on South Africa

I thought it would be worth looking at the South African Rand (ZAR), in terms of its performance as a currency in recent times and prospects for the future.

Economically, South Africa is a mixed bag. With an abundance of natural resources, the country is a major commodities exporter; its economy has opened up dramatically in recent times. And yet it still faces huge social and structural issues. Moreover, it has not been immune to the global economic downturn. China is a major resources importer and its slowdown has hit South African exports. The IMF recently said that if downside risks to global economic growth materialise, there will be greater challenges facing commodity exporters such as South Africa.

That said, economic data released since February has been positive. Economic growth forecasts for South Africa in 2012 vary. South African Reserve Bank recently upped its own GDP growth forecasts for 2012 to 3 per cent.

In the past 12 months the ZAR/GBP rate peaked at 13.31 while hitting a low of 10.67. Our forecasts for the rate are as follows: 3 months 12.37; 6 months 12.24; and 12 months 12.68.

If you want to ensure your bottom line is protected, call us now and we’ll help you put together a risk strategy.  Alternatively, you  find out more about the rate forecasts in our monthly Outlook. 

Business blooms for Beautiful Bottoms

Beautiful Bottoms was established by Poppy Sexton-Wainwright and Lauren Skerritt back in 2009 after they met as business students at Newcastle University. As soon as they concluded their studies, Poppy and Lauren were able to focus their attentions onto their company, which offers beautiful silk lingerie at affordable prices. Two and a half years later, they are still going strong.

Beautiful Bottoms products are designed in London and produced by suppliers in China who then invoice for their services in dollars. With numerous lucrative transactions under way, it became a company priority to find the best FX rates around.

Naturally, their first step was to utilise the service provided by their bank, but after their initial transactions Poppy and Lauren became unhappy with the service they were receiving and voiced their concerns to a friend. He recommended they contact Smart Currency Exchange. Poppy explained: “Our bank just didn't make us feel like our business was important to them every transaction was marred with hassle - and that's even before we mention their extortionate rates”.

Having just finished designing their latest collection their energies are now focused on connecting with their customers via social media and jetting off around the world to visit  trade fairs in Paris and New York. Being so busy, it is the simplicity and efficiency of Smart's service which really appeals to Beautiful Bottoms. Poppy elaborated:
“Everything is just so much easier with Smart. With just an email I can book in transfers to clients and suppliers – it is so simple”.

Poppy went on to compliment the personal service offered by Smart Trader, Alex Bennett and the team: ”Alex and all of the other traders that I have dealt with at Smart are always happy to advise on current FX rates and do all that they can to make it a simple and pleasant experience, with very little hassle”.

When asked whether they would ever be tempted to use another FX supplier, Poppy answered: “I have friends who work in FX trading, so I am clued up on the rates of the day. Smart give us a highly competitive rate and I very much doubt that anyone could beat that”.

The message is clear. Managing your foreign currency exposure effectively is a vital requirement for any business that deals internationally. For more information, get in touch with the team at Smart Currency Exchange on 0207 898 0503 alternatively visit our website at www.smartcurrencybusiness.com.

Stabilise your international trade as the Eurozone unravels

Following a period of relative calm at the beginning of the year, there are ominous signs that the situation in the Eurozone may be starting to unravel. First, France elected a new left wing president - Francois Hollande – who immediately told supporters that his victory gave hope of an “end to austerity”. Then the leader of Greece's left-wing Syriza bloc said he would try to form a coalition-based government which would renege on the terms of the recent EU/IMF bailout deal. Alexis Tsipras, whose bloc came second in the Greek election, said Greek voters had “clearly nullified the loan agreement.”

This is significant news for the euro and, indeed, anybody involved in import and export to the Eurozone. The reason is that it once again raises fears that we may soon witness a partial or complete break-up of the Eurozone. How likely is that? Well, it’s quite telling that bookmakers Paddy Power – who are no fools – go as short as 6-4 that Greece will be using Drachmas by 1 December 2012.

Given this precarious position, it was no surprise that sterling hit a 3.5-year high against the euro of 1.2440 in the wake of the general election results in Greece and France.

But the broader message is one I’ve spelt out before: volatility in currency markets will be the norm for the foreseeable future. Some kind of currency strategy is an absolute must-have for businesses dealing in international trade.

There’s no doubt the 1.2440 figure above looks hugely tempting. In the last issue I wrote that 3-month GBP expectations against the euro were at 1.23, moving to 1.25 on a 12-month scale. At the time of writing, I would revise those figures upwards to 1.27 (3-months) and 1.32 (12-months).

However, I would strongly advise use of a hedging strategy because the Eurozone crisis is a fluid situation. Buyers from the Eurozone could use a hedge to ‘lock-in’ that 1.24 rate – which is excellent by the standards of recent years – while leaving some scope to purchase further euros later in the year.

The reason for this is that while the situation in the Eurozone doesn’t look healthy at the moment and points to a further deterioration of the euro, things can change quickly – and recent history suggests they probably will. Remember, the UK economy itself is in recession. Moreover, the UK Coalition of the Conservatives and the Liberal Democrats is on shaky ground right now, especially after the hammering both parties took at the recent local elections. Tellingly, commentators on both left and right of the political spectrum are increasingly questioning the Coalition’s austerity measures. Yet any change in tack would likely see the markets hammer sterling.

These are, need I say it, uncertain times; a robust currency strategy for any business engaged in international trade is more important than ever. Find out how your business can avoid market volatility by emailing us, or calling us on 020 7898 0500 – you can also visit our website at www.smartcurrencybusiness.com

A Good time to secure your Forward Contract?

Carl Hasty, head of trading with Smart Currency Exchange, looks at whether now is a good time to forward buy euros with sterling closing on a three-year high against the euro.

The markets seem to be picking off the weaker Eurozone states one by one. First it was Greece and now they appear to have Spain in their sights as major structural deficiencies in the Spanish economy come to the fore.

“Spain is facing an economic situation of extreme difficulty...and anyone who doesn’t understand that is fooling themselves,” Prime Minister Mariano Rajoy recently told a meeting of his People’s Party in Malaga.

For a snapshot of Spain’s economic woes, consider the following: Santander, the Eurozone's largest bank, was recently selling off two-bedroom apartments around a communal swimming pool for 65,000 euros - that’s 50 per cent lower than they were selling at peak. The debt issues of the Eurozone’s weaker nations appear to be unravelling; clearly, the Eurozone crisis hasn’t gone away.

Take a look at sterling against the euro. At the time of writing it stands at £1/€1.21. Problems in the Eurozone member states, like those in Spain, have huge implications for the euro. At Smart, we take regular forecasts from the top analysts in the City to help us map out where the markets are expected to head. At present we’re seeing 3-month expectations against the Euro at 1.23, moving to 1.25 on a 12-month scale.

But these are only forecasts and, like any forecasts, they can change – particularly with exchange rates so volatile right now. Moreover, if you look at sterling versus the euro over the past few years, anything over 1.20 represents a very good rate – remember, the £/€ rate almost reached parity not that long ago.

Forward contracts

With this in mind, we think now could be a good time to ‘lock-in’ the current £/€ rate with a forward contract. A forward contract is a form of hedging which lets you reserve today’s exchange rate for a set period of time until it comes to settling your invoice.

Forward contracts are a very good way of helping a business to budget when importing or exporting. For instance, if your business knows now roughly how much currency it will need to purchase in the next twelve months or so, the current 1.21 exchange rate can be reserved today. Alternatively, you might wish to hedge – reserving, say, 50 per cent of the currency you need while purchasing the rest in, say, six months.

This probably represents a good hedge for three reasons. Firstly, you have locked-in at an attractive exchange rate. Secondly, our forecasts suggest the rate might get slightly better so you still get the chance to benefit from any upside to sterling by not purchasing all of your euros now. And finally, it would take a sizeable shift in market sentiment for the euro to start appreciating markedly against sterling – thus leaving yourself partially exposed in the short-term doesn’t represent a major risk.

To secure this rate a small deposit needs to be paid within two days of placing the order. The outstanding amount is paid just prior to the completion of the transaction.

To discuss your options give us a call on 020 7898 0500 or go to: www.SmartCurrencyBusiness.com

For more information on Smart Currency Business call: 0845 638 0571 (or +44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyBusiness.com

How Smart helped David from Enexos

Throughout history the sun has been used to give light and heat and its almost unlimited potential can provide more than enough energy for the whole planets growing energy demands. Many different methods have been used to capture its energy but by far the most simple method is the use of photovoltaic (PV) cells which trap the sun's energy and convert it into electricity.

London-based company Enexos were established in 2009. Their aim was to show that the use of solar power is sustainable and profitable for small and medium-sized businesses.

After the Labour Government introduced generous feed-in tariffs to encourage businesses to investigate renewable energy options, people were quick to invest and Enexos was bombarded with demand for their design and consultancy services to do with PV cells.

Shortly after the Coalition Government took the reigns from Labour in May 2010 a complete U-turn in policy was announced that detrimentally affected the availability of these feed-in tariffs. Understandably these changes enforced by the new Government meant that Enexos had to completely re-examine their business model and their financial dealings. This led them to Smart Currency Exchange....

David Finlay, Managing Director of Enexos told us what it was that made him choose Smart: “First and foremost, the rate we obtained was as good as we could ever realistically hope to get. Of almost equal importance was the fact that the transaction was both fast and completely hassle-free. When you throw in the added bonus that phoning Smart Currency means you can immediately talk to a person who is both knowledgeable and polite ... what's not to like?”

David continued: “For us it's a no-brainer, Smart Currency has a first option on all our future FX business. SME's like ourselves would do well to give them a call the next time they are considering buying or selling foreign exchange”

David expressed concern that not all businesses were aware of currency exchange experts and often use their bank to transfer money, a process which incurs high fees: “If our experience is any guide, SME’s in this country doing FX just can't afford to go through their banks. Banks negotiating FX for small corporates seem intent on only one thing … to maximise their own profits, even if this involves ripping off their customers in the process, and the sad thing is that most people don't even realise”

“The guys at Smart Currency Exchange are serving a very necessary economic function and I wish them well”

The message is clear. Managing your foreign currency exposure effectively is a vital requirement of any business that deals internationally. For more information, get in touch with the team at Smart Currency Exchange on 0207 898 0503.

For more information on Smart Currency Business call: 0845 638 0571 (or +44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyBusiness.com