Exchange Rates - Business assets and liabilities
Fluctuations in exchange rates will impact on the value of any foreign currency denominated assets or liabilities.
If you are a company with foreign currency denominated assets or liabilities, you should be concerned about exchange rates and ensure you get the best currency exchange rates you can. Dealing with foreign currency exchange specialists is often the best solution when it comes to managing the ever changing world of exchange rates. If you don't want your company's profits to be eroded by foreign currency fluctuations, using a commercial currency brokerage is advisable.
How will exchange rates impact on your company assets?
If you are a business with an asset denominated in American dollars for example, say a share in a US company or an American bank account, the dollars will weaken if sterling strengthens. Currently the exchange rates are around $2 for a pound, sterling continues to get stronger, which means the asset - measured in sterling – continues to decline. So exchange rates can directly impact on a company's profits.
Liabilities and the exchange rate
However if a British company had a liability denominated in US dollars, say for example it took out a loan in US dollars, because of the strength of the exchange rates on the British pound it would take less time to repay the liability, so the company will make a gain.
Variations in exchange rates
Of course this works the other way round too – the exchange rates can favour one currency over another and they continually fluctuate so assets and liabilities vary.
Fluctuating exchange rates
The world's major currencies float freely against each other so like anything else that is traded on an open market, the unit of currency is worth what people are prepared to pay for it. As such, if you buy your currency at a hotel reception, bureau de change, bank or through a specialist foreign exchange broker, the exchange rates and therefore value for money, will vary. There are some specialist foreign exchange companies that can buy ‘wholesale' from the market, which means better exchange rates for buyers.
Where can you find the best exchange rates?
If you want to exchange currency, you could go to your bank or bureau de change, but you won't get the best deal. That's because banks tend to be big, expensive and unresponsive organisations. If you are making a large transaction, such as buying a property abroad or if you'll be exchanging money regularly for business for example, it is best to use currency exchange brokers who will ensure you get better exchange rates than the high street banks.
Foreign Currency Exchange Ltd is a commercial currency brokerage based in the UK. We help thousands of clients move hundreds of million pounds across the globe every day. From large businesses to private individuals who wish to send regular payments abroad, you can save money with us by getting better currency exchange rates than with your bank. The Foreign Currency Exchange buys currency at wholesale rates and can help you save money with our fast secure service. For more information contact us now, telephone +44 (0) 20 7989 0000 or email info@fcexchange.co.uk