With uncertainty over the outcome of presidential elections in France and ongoing financial instability in Greece, Italy and Portugal, Raphaels Bank is helping businesses to lock in euro rates rather than hedge their bets on the pound continuing to strengthen against the euro. Demonstrating the volatility of the markets, importers buying €100,000 today are up to £1,600 better off than if they had bought the same amount at the start of April. In contrast, exporters will have seen their profits slump as they converted euro payments back into Sterling.
“Relying on movements in the currency markets is never a good idea and right now the markets are particularly volatile,” said Tony Wilson, director of commercial foreign exchange (FX) at Raphaels Bank. “Last week, the pound hit a 20-month high against the euro. Good news for importers and people buying property overseas – less so for those selling. The key fact is that no-one can say with any certainty what will happen, despite forecasts from some quarters that the pound is on the up against the euro. Profit is so hard won, why gamble on fluctuations in exchange rates?
“Just looking at the impact of differences in exchanges rates from the start of the month to the past week, it is clear how volatile the market is and what a difference a few days can make to a transaction. Prudent businesses will want to protect their profitability and lock in rates to give them some certainty during a very uncertain time in the FX markets,” concluded Wilson.
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