AFEX Head of Dealing Australia, David Greene, said the predicted range of the AUD against the USD in 2015 currently sits from a low of 0.70 to a high of 0.92, or 22 cents, according to the experts.

“The profits and cash flow of Australian businesses reliant on purchasing or selling goods in international markets are highly vulnerable to this large swing predicted for the Australian dollar. Without ongoing prudential management of this volatility, businesses may have to increase prices or revisit their budgets.  These uncomfortable adaptations are disruptive to any business and can be stressful to implement,” said Mr Greene.

The AUD has moved 11.5% since August alone, during which time AFEX has seen a 144% upsurge in demand for its tailored risk management solutions from Australian SMEs as compared with the previous six months.

According to Mr Greene, this level of volatility is only expected to increase in the New Year, in line with anticipated interest rate hikes in the US as soon as June 2015.

“The major currency risk event is and will continue to be the anticipated interest rate hikes in the US. Improvements in the US economy have been consistent and well documented, with impressive gains in the labour market, consumer sentiment at multi-year highs and healthy growth consolidating above 3% year on year. In this context, pressure has been mounting to begin a round of monetary policy tightening. This is the key reason for the recent appreciation of the USD against most currency pairs,” said Mr Greene.

“Uncertainty around the central banks in the US, Europe and Japan will also be on the radar for 2015 and will add significantly to volatility levels across all currency markets,” he said.

Mr Greene added that all Australian SMEs with exposure to international markets will be exposed to this volatility, irrespective of size or if they are importers or exporters.

“As to the degree of exposure, this can only be determined by how well prepared those SMEs are to a changing landscape. Businesses that perform best when volatility is high are those that have a process in place to manage the risks associated with those conditions,” he said.

AFEX urges SMEs to consider risk management defences

To help protect themselves, AFEX is encouraging Australian SMEs to set more realistic budgets which accommodate market volatility. AFEX provides tailored risk management and payment solutions to nearly 8,000 Australian SMEs; a client base which has doubled in the last two years.

Richard Poulton, AFEX General Manager Asia Pacific, said while December was typically the time of year when most businesses put hedging strategies in place, it should really be part of their ongoing strategy.

“Currency management strategies implemented throughout the year allow our clients to concentrate on day-to-day business, safe in the knowledge that they have managed forex risk,” he said.

“Ultimately, forex-exposed businesses should also weigh up the risks of what an adverse currency change could do to cash flow and profit. If they can stay afloat through the worst case scenario then the spot market is right, but for the great majority of SMEs a risk management structure is the most conservative approach,” concluded Mr Poulton.

The post Outlook 2015: Heightened volatility set to disrupt currency exposed SMEs warns AFEX appeared first on AdviserVoice.

Based in AFEX’s Sydney office, David will oversee the company’s foreign exchange dealing on behalf of its SME, corporate and institutional client base across Australia and Asia-Pacific.

David joins AFEX from Western Union where he worked as Senior Corporate Foreign Exchange Dealer from 2010. He has also held previous roles at Custom House and National Australia Bank.

“We’re delighted with David’s appointment and know his excellent understanding of the risks and opportunities our clients face will serve them very well,” said AFEX Chief Executive Officer, Jan Vlietstra.

“He joins us at a very exciting time for AFEX in Australia as we continue to grow rapidly in the domestic market and build new opportunities across Asia-Pacific.”

The post AFEX Announces Head of Dealing, Australia appeared first on AdviserVoice.