Insight

Currency 101

In today’s global economy, your business probably either operates internationally, with customers in other countries, or you source goods or services from international suppliers. At some point you’re likely to be receiving payments from overseas or making them. 

Complicating matters is the fact that there’s no single, unifying world currency. Some consider the U.S. dollar as a de facto global currency because it’s accepted nearly everywhere. As a result of this, some businesses choose to only do business with U.S. dollars because they believe it will make transactions easier.

It’s possible that using only one currency will make life easier, but is it really the best option for your business? Sooner or later, you’ll need to consider whether or not you’ll use foreign currencies when it’s appropriate. If you have regular or frequent foreign transactions, you may be better off using other currencies for your international transactions. 

What You Need to Know About the FX Market

The foreign currency (FX) market is the largest investment market in the world. Every day it trades over $5.3 trillion in U.S. dollars. Currencies are traded against each other as pairs. For instance, the Euro (EUR) is traded against the U.S. dollar (USD). Currency prices can fluctuate based on the economic situation of the countries whose currency you’re trading, world news, political actions, and a number of other reasons. Prices can be volatile, reacting within moments to news or events.

The FX market is complex to begin with, and the complexity can increase during times of high market volatility. Unless you’re an FX expert, it’s hard to stay on top of what’s happening in the market. Knowing when to buy or sell, or what kind of hedging options you should use, can make you feel like you’re in over your head. On top of that, there’s more to managing FX than simply watching the market. There are also fees, markups, and exchange rates to be aware of when making or receiving payments in foreign currencies. 

When you have a business to run, you probably don’t want to have to concentrate on the details of the FX market, or how the USD is performing against the EUR. That’s why you need an expert on your side to help you navigate it and make the best decisions for your foreign transactions. 

How an Expert Can Help

Volatility increases the risk involved with using foreign currencies in your business. When you manage that risk, volatility can also help increase your profits. That’s another good reason to partner with an expert and take advantage of what the FX market can do for your business.

The experts at MONEX USA understand the FX market. A top currency forecaster, we work with currencies around the world. We currently offer over 130 currencies to meet your global payment needs. 

While you concentrate on running your business, we’ll handle your global payments process and help you identify and manage FX risk. We’ll work with you to analyze your options and give you the information and practical advice you need to make decisions that align with your business goals. With our help, you can create personalized FX strategies for your business and stay on top of relevant market changes.

 

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Juan Perez Senior FX Trader and Strategist Monex USA

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