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Insight to All Things Currency and Treasury Management

In August the lira dropped significantly in value against the dollar, leading other emerging market currencies to dip. And although the initial shock of that volatility is over, the lira still has investors on edge and there are other volatile currency movements that could manifest into negative FX impacts to be heard about in Q3 earnings calls.

INDIAN RUPEE DEPRECIATION

After sliding 12 percent this year, the rupee rallied as much as 1.1 percent on Wednesday, Sept. 12. This comes after the currency hit a new low against the U.S. dollar the previous day, closing 72.69. The recent appreciation comes after a government official announced possible intervention to strengthen rupee – the possibility of which would include increasing interest rates. However, this uptick comes after months of depreciation that likely have had impacts on corporate balance sheets.

ARGENTINE PESO SLIDE

The Argentine peso has lost more than half of its value this year and state officials continue to support the 60 percent interest rate through December. The peso closed at 37.95 against the dollar on Sept. 11 amid continued trade tensions and a looming recession.

PHILIPPINE PESO POISED TO FALL

The Philippine peso has fallen 7 percent this year and reached its weakest point since 2005 last week, reacting to oil prices, inflation and skeptical investors responding to falling emerging market currencies.
 

THE POTENTIAL IMPACTS

The common thread volatile movements in these currencies present is the potential negative impact they can have to Q3 earnings for those organizations that either lack insight into all of their currency exposures (not just the ones they do the most business in) or are not fully managing FX.
 

WHAT YOU SHOULD BE ASKING TO AVOID IMPACTS TO YOUR BOTTOM LINE

Do you know what your organization’s exposure is to the lira, rupee, Argentine and Philippine pesos?

 

Do you know how volatility in these and other emerging market currencies are impacting earnings?

Do you have the data you need to fully manage your exposures in order to protect against any future currency movements?

If you answered no or are unsure about the answer to any of the questions, know that now is the time to prepare for the next wave of volatility.

 

MANAGE FX NOW, AVOID IMPACTS LATER

FiREapps has a history of helping multinational organizations of all sizes not only gain access to accurate, complete and timely data but also manage currency-related exposures to their balance sheet, forecast cash flow exposures, provide analytics and facilitate reports to track the progress of a program.

In an environment where the future of emerging market currencies is uncertain, it is imperative for organizations to be currency aware and have the necessary visibility to know where exposures are and what impacts the company is susceptible to.
 

THE NEXT STEP

Talk to FiREapps. Our Directors of Risk Advisory can help you take a look at your program, find opportunities for improvement and implement the necessary enterprise currency management solution to better manage FX and help avoid any future losses.