Australia has recorded its largest annual inflation reading (5.1%) this year and the RBA has hiked interest rates again, while Downing Street has changed the guard and the US economy is bouncing back. In this environment, some investors and businesses may be holding out before transferring significant sums across borders. However, a more beneficial approach can only come about by understanding currency risk exposure. 

Data from global payments and international money transfer company, OFX shows two encouraging trends. In October 2022, OFX data shows a month on month increase in both Limit Orders and Forward Contracts from Australian corporate clients. During the same period, OFX data shows a month on month and year on year increase in Limit Order usage among Australian individual clients.

With the Australian dollar (AUD) showing early rallying signs, there is an opportunity for many businesses and investors to reap the benefits of an improved AUD – if they plan correctly. Understanding how available FX tools and resources could help them protect their financial interests against inflationary pressures by better managing FX risk amidst volatile currency markets is key.

“Foreign exchange (FX) planning helps our business navigate currency challenges and secure more favourable rates than offered by the banks, protecting our margins and growth,” Christian Coenen, eldest son of founder Herman Coenen and director of Herman Brot told Retailbiz.

“Our business regularly makes international payments between UAE Dirham, Euros and Australian dollars to pay suppliers and German-based milling companies that produce Herman Brot’s IP – a secret special concentrate that helps deliver on high quality and taste. 

“We credit OFX expertise and tools as an important factor in minimising the impact of recent currency volatility on profitability, and these services help our team stay focused on navigating the wholesale operation through the current tough economic environment.

“For example, for our FX transfers we use OFX’s Customer Rate and this, combined with other factors such as different currency exchange amounts, currency types, dates and times can result in different actual costs.”