The last few years have been unpredictable for the oil and gas industry. The coronavirus pandemic saw oil demand suddenly slump before rebounding at a break-neck pace as economies reopened. Meanwhile, the business environment became increasingly hostile for fossil fuel companies amid activist investors and legal challenges, and with tighter regulations on the horizon.
Foreign exchange creates noise on your bottom line, disguising your costs and varying your profits. Fluctuations in exchange rates disrupt your cash flow visibility and stymie growth, so in our April webinar we looked at some of the issues facing businesses with a foreign exchange exposure and discussed how to implement a simple hedging strategy.
The webinar was presented by Phil McHugh, Senior Market Strategist at Currencies Direct.
Key pointers from the webinar
Major forecasts for the pound against the US dollar and euro vary dramatically depending upon which financial institution has issued them. The high levels of uncertainty currently gripping the markets are making it even harder for businesses to keep a handle on their overseas payments and profits without a defined strategy.
Additional risk events facing the currency market in the coming months include:
- German elections
- UK general election
- Pressure on BoE to hike interest rates
- Federal Reserve tightening cycle
- Donald Trump’s fiscal plans
Key steps to making a hedging plan include:
- Identifying your currency exposure - how much do moving exchange rates affect your margins?
- Deciding how much of your exposure to hedge; are you looking for protection or opportunity?
- Selecting the right mix of hedging options; forwards, market orders, or options
- Choosing the right type of hedging plan
As well as looking at why you should hedge in times of uncertainty, we also cover why maintaining a hedging plan even during favourable market conditions is beneficial.
Watch the recording to learn how to maximise your cash flow visibility and keep currency fluctuation as just a small business consideration, not a major challenge.
Watch the recording
For more information on developing a hedging strategy that protects your business from foreign exchange volatility, just contact our dedicated corporate team today.