FX Guide
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This guide offers CFOs and finance leaders an introduction to foreign exchange (FX) as businesses increasingly engage in international operations. It covers fundamental concepts such as exchange rates, effects of currency strength, and effective FX risk management strategies. The document aims to educate and provide actionable advice to enhance business practices in FX and includes resources for live market rate comparisons.
FX Guide
- 1. © Kantox, 2014 The CFO’s Comprehensive Guide To Understanding Foreign Exchange For Business Bettering Your Business FX Operations By Timothy Woods and Antonio Rami
- 2. © Kantox, 2014 Contents of this guide FX Guide Introduction 1 FX explained 2 FX explained - infographic 3 Exchange rates explained 4 Business foreign exchange explained 5 Effects of home currency strength and how to act 6 Effects of a weak home currency and of increased volatility 7 Choosing an FX provider 8 Advice for effective FX risk management 9 The takeaway: bettering your business FX operations 10
- 3. © Kantox, 2014FX Guide “As 2 billion people are now online, exporting has never been easier. With research now pointing to a 34% productivity increase for businesses that export, it is further proof that it is now absolutely essential to do so. Companies must if they are to stay ahead of the curve, or their competitors will beat them to it”. Philippe Gelis Co-founder & CEO of Kantox
- 4. © Kantox, 2014 1. Introduction FX Guide Many CFOs and finance leaders are not yet experienced in the FX market. For that reason, we have written this guide, where we explain the fundamentals of foreign exchange applied to businesses. As business becomes increasingly international, more CFOs need to educate themselves in foreign exchange for the good of their companies. For CFOs experienced in FX For CFOs new to FX or keen to refresh knowledge base Visit our Benchmark solution for access to live (updated in real-time) mid-market rates. This service is free of charge for unlimited access, and there is no obligation to trade whatsoever. Here you can compare your bank or broker on your FX rates. We also hope that the last section in this guide, Advice for effective FX risk management, will be particularly useful for you. Benchmark
- 5. © Kantox, 2014 1. Introduction FX Guide Many CFOs and finance leaders are not yet experienced in the FX market. For that reason, we have written this guide, where we explain the fundamentals of foreign exchange applied to businesses. As business becomes increasingly international, more CFOs need to educate themselves in foreign exchange for the good of their companies. For CFOs experienced in FX For CFOs new to FX or keen to refresh knowledge base In this guide we analyse the basics of FX, exchange rates, the numerous ways FX can affect businesses, and we offer some key advice on how businesses can improve and effectively manage FX risk. We aim to educate you on the fundamentals of foreign exchange, provide actionable advice and ultimately, better your business approach to FX.
- 6. © Kantox, 2014 Contents of this guide FX Guide Introduction 1 FX explained 2 FX explained - infographic 3 Exchange rates explained 4 Business foreign exchange explained 5 Effects of home currency strength and how to act 6 Effects of a weak home currency and of increased volatility 7 Choosing an FX provider 8 Advice for effective FX risk management 9 The takeaway: bettering your business FX operations 10
- 7. © Kantox, 2014 2. FX Explained FX Guide Foreign exchange (Also known as FX, forex, currency exchange) is the trading of one currency for another. Domestic exchange involves the exchange of money for goods or services. Abroad, the same is true, but foreign currencies are involved (with the exception of the Eurozone, in which the 18 Member States all use the same currency, the euro). Therefore, in order to be able to transact in these foreign currencies, a foreign exchange market is necessary. There are 2 main functions of the FX market: The foreign exchange market is the largest in the world, at $5.3 trillion a day, or USD 1,378,000 billion a year, compared to global GDP of USD 71,670 billion.. It is simply a colossus, unrivalled in size by any other market. Real Economy Speculation
- 8. © Kantox, 2014 Download Want to keep reading? Download the full version of this paper Visit our blog for more helpful guides and resources blog.kantox.com FX Guide
- 9. © Kantox, 2014 UK Headquarters Kantox Ltd. (Company Nr. 7657495) Longcroft House 2-8 Victoria Avenue London EC2M 4NS United Kingdom (+44) 20 8133 3531 Spain Office Kantox S.L.U. (CIF B65513525) Torre Mapfre, Planta 10 Marina, 16-18 08005 Barcelona Spain (+34) 93 567 98 34 kantox.com Copyright © 2014 Kantox Kantox Ltd is registered with the Financial Conduct Authority (FCA) under the PSR 2009 (reference 580343) as an authorized payment institution. HMRC Certificate of Registration for Money Laundering Regulation (MLR) is 12641987. UK Data Protection Act Registration (Nr. PZ2909796).