In today’s world it is becoming increasingly important for businesses to be able to transfer, exchange and invest Forex at the drop of a hat. The foreign exchange market has quickly become of the largest and most profitable financial markets in the world. In fact, Simon Potter (Head of the Markets Group at the Federal Reserve Bank of New York) calls it the ‘lifeblood of the global economy’. However, despite its positive impacts and its massive influence on the global market, transferring Forex is not always easy and is certainly not without its complications. Here is a list of the top 5 challenges that businesses face when it comes to Forex transfers and how to overcome them:
- Scams and fraud
According to Simon Potter, ‘The FX market is…relatively lightly regulated’. This is because there is no general system of regulation which means that ‘regulatory treatment across jurisdiction varies’. Unethical misconduct has the ability to undermine the trust of the public. This means that private and official sectors need to play an active role in promoting ‘best practices’. According to ForexRealm, as a small/medium business, you need to make sure that your Forex broker is legitimate and works with large financial institutions. Here at ForexPeople we pride ourselves on being one such legitimate Forex broker. We are convenient, trusted, and offer the best rates.
- Foreign exchange risk
Investopedia explains that the FX market is constantly exposed to ‘changes in a currency’s exchange rate’. This sometimes results in an investment’s value changing, which could mean a loss for your company. It is important to put a few preventative measures in place, such as ‘buying futures, forwards, or options on the currency market’.
- Political risk
As we all know, sometimes a country’s government suddenly and unpredictably changes its policies that regulate international trade or is exposed to political instability. This can result in a negative impact on a company’s investment returns. Forbes advises companies to follow a simple ‘three-step process’ including the steps: (identify, measure and manage) to avoid political risk.
- Lack of capital
A distinct lack of available capital could be one of the biggest challenges businesses face when it comes to investing overseas. Unfortunately, due to the nature of transferring on the FX market there are often times when your business suffers a loss. It is vital to try and keep a little available capital aside to tide you over in times of loss.
- Transferring to multiple markets
If your focus is too broad and you are transferring into too many currencies you may lose out. Rather try to focus on one or even two markets so that you can monitor them closely and adapt accordingly.
We hope that these pointers have been helpful. Please do let us know if you have any further questions or if there is anything at all we can do to help with your current Forex challenges and follow us on Facebook or Twitter for regular news and tips.
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