Stef’s market update – July 2026 – why more businesses are taking currency risk seriously

Most businesses keep a close eye on interest rates, inflation and borrowing costs but one area that’s often overlooked is foreign exchange.  If you’re importing stock, exporting goods or working with overseas suppliers or customers, even relatively small movements in exchange rates can have a noticeable impact on cash flow and profit.

We’re seeing more businesses pay closer attention to this, particularly those buying in US dollars or euros. After a few years of market volatility, many are looking for greater certainty around costs rather than leaving exchange rates to chance.

One of the biggest risks is agreeing prices with customers based on today’s exchange rate, only for the market to move before payment is made. Take a business importing $10 million of stock each year. If it budgets on an exchange rate of 1.34 but the market falls to 1.30, those purchases suddenly become much more expensive. The business either absorbs the extra cost or passes it on through higher prices, neither of which is ideal.

The same applies to exporters. A business expecting to receive €1 million in three months could see its sterling return reduced simply because exchange rates have moved before payment arrives.  Good currency management helps remove some of that uncertainty. It allows businesses to budget with greater confidence, forecast cash flow more accurately and protect profit margins. There are several ways to do this. Forward contracts allow businesses to lock in exchange rates for future transactions, while currency options offer protection if markets move against them but still allow businesses to benefit if rates improve. Some firms also use multi-currency accounts or naturally offset income and expenditure in the same currency.

This isn’t just relevant to large international businesses. Manufacturers, importers, exporters, retailers, technology firms and professional services businesses with overseas customers or suppliers can all benefit from reviewing their foreign exchange arrangements.

If your business trades internationally, it’s worth asking whether your current approach still gives you the certainty you need. We work closely with trusted foreign exchange specialists to help clients manage currency risk alongside their wider funding arrangements.

To find out more about the services available, visit Smart Currency Business.  If you have any questions or would like to open an account, please contact Tobias Woodward at Tobias.Woodward@smartcurrencybusiness.com.