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Currency Exchange Risk – What is it? How to minimize currency risk?

Currency exchange risk

Do you think currency exchange rates are only a concern for bankers? No. Currency risks affect all international enterprises as well. Many organizations across the globe are exposed to currency risk, irrespective of whether they realise it or not. With the ongoing wild swings in economies, currency exchange rate risk is back on the agenda. So, let’s explore more about what currency exchange risk is and how to minimise it. 

What is currency risk?

Otherwise known as exchange-rate risk, currency risk arises from the change in the price of one currency concerning the other. Enterprises or investors that have business operations or assets across cross-country borders are exposed to currency risk. The exchange rate risk typically creates unpredictable fluctuations in profits and losses. 

Why managing currency risk is imperative?

As per a survey of HSBC conducted by 200 chief financial officers and about 300 treasurers, about 70% CFOs asserted that their company struggled with reduced ROI due to the unavoidable risk of currency exchange rates. Managing the currency risks can bring an extensive range of advantages for enterprises. Some of them are listed as follows:

  • Enhanced borrowing capacity
  • Improved understanding of how fluctuations in currencies influence business balance sheets
  • Safeguarding cash flow and profit margins
  • Improved budgeting and financial forecasting

The rule of thumb states that businesses try to avoid any potential losses when currency exchange rates fluctuate. Wondering what currency risks are and how to minimize them? Here are some tips for you. 

Tips to Minimise business currency risk

Having a comprehensive idea of how and where currency fluctuations impact a company’s cash flow isn’t a cakewalk. Different macroeconomic trends and competitive behaviour within market segments define how currency rates tend to affect the cash flow of any business. To minimize cash flow, enterprises need to:

  • Re-analyse your operating cycle

Review your company’s operating cycle to find out what FX risks exist in your financial system. 

  • Determine the rules that you want to apply to your currency exchange risk and stick to them

Understand the company’s financial objectives and draft an effective FX policy that outlines the operative cash outflows and inflows. 

  • Make peace with the fact that you have unique currency flows

Every business is unique and your currency flow affects that. Depending on the structure of your liabilities and assets, understand that currency fluctuations might have a certain impact on your funds. 

  • Handle your exposure to currency risk wisely

While the currencies are constantly appreciating and depreciating, determine the financial instruments that can help you mitigate uncertainties which may jeopardize the company’s financial objectives. 

  • Automate the process

Automate the process with the help of a renowned financial service provider. 

Conclusion

There are three types of currency exchange risks: transaction exposure, economic or operating exposure and translation exposure. Dealing with currency exchange risks financial assistance and if you want you can also reach out to foreign exchange experts to help you glide through the FX process seamlessly. Irrespective of whether you are a budding business or an enterprise giant, don’t let your finances hold you back. Seek professional expertise and overcome FX risks like a pro. 

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Currency Exchange Services at Transcorp – Process & Benefits

Currency exchange

Currency exchange services are essential for anyone who travels abroad. Whether you travel overseas for business or leisure, having foreign exchange is an absolute must! When you travel internationally, you need foreign currency for all your transactions. Currency exchange can help you convert your native currency to money accepted in foreign lands. Transcorp is a company that offers reliable currency exchange support. With their help, you can get forex travel cards, travellers’ cheques, and foreign currency maintenance services. Unsure about how it works? Let’s break it down and analyse the process and its benefits! 

What is a Currency Exchange Service?

A currency exchange service is a licensed service that helps customers exchange different currencies. Customers can swap currencies before they take on international travel and transactions. A service provider usually charges a small fee for making the swap and adjusts it with the conversion rates. Foreign exchange currency notes can be swapped to get the corresponding amount of domestic money or vice versa. In earlier days, many of these exchange services had teller stations for the physical exchange of currency. But now, most transactions have shifted online for maximising convenience! 

What Types of Foreign Exchange Services does Transcorp Offer?

Transcorp is authorised by India’s central bank to provide currency exchange services. It holds the license of “Authorised Dealer Category II”, given by the Reserve Bank of India (RBI). This license allows it to buy and sell all sorts of foreign currency. In this category, Transcorp offers 3 main services: 

  • Foreign Currency Maintenance: People who frequently travel abroad may need to maintain a certain sum of foreign currency at all times. When people regularly travel back and forth from their home country to a foreign land, they need foreign currency at all times. Transcorp offers this service for ensuring a seamless experience. 
  • Travellers Cheques: Travellers’ cheques are paper cheques that can be encashed for foreign currency while travelling abroad. You can purchase these cheques for a certain amount before you travel. Each cheque has a stipulated sum of foreign currency assigned to them. These cheques eliminate the need to carry large sums of currency and maximise convenience while travelling. 
  • Travel Cards: Travel cards are the most advanced mode of carrying foreign exchange while travelling. These are prepaid cards loaded with your preferred foreign currency. Travellers can swipe them at ATMs and POS terminals for transactions overseas. 

What is the Process of Getting Quick and Convenient Currency Exchange Service?

The process of getting currency exchange services from Transcorp is super simple. You must first visit their website and fill up the contact form. The personal details you need to add are: 

  • Name: Fill in your first name and last name for efficient processing of your application.
  • Email: Fill in your email ID so Transcorp can contact you to help set up your foreign exchange service.
  • Location: Specify your current location in the form so the staff members of your nearest branch can contact you for helping to set up your service.
  • Currency: Specify the currency type you want to exchange so Transcorp can get back to you with a precise and detailed response.
  • Service Needed: Choose if you want to get a forex card, travellers’ cheques or foreign currency notes so the right team at Transcorp can reach out to help.
  • Comment: Here, you can add details about any other needs you have so Transcorp can offer you tailored services. 

Once you fill this form, you can sit back and relax. Service agents from Transcorp will contact you soon to help you find a plan that suits your needs.

What are the Benefits of Currency Exchange Services at Transcorp?

If you avail of this service, you can unlock the following benefits: 

  • Quick and Transparent Communication: The well-trained staff and the highly connected network centres ensure that you get speedy and transparent updates. The seamless communication channels help you stay in the loop.
  • Branches Near You: Transcorp has 22 service branches. The presence of multiple service branches ensures that your requests can be processed and managed very quickly and efficiently. 
  • Selling and Buying all Foreign Currencies and Travellers’ Cheques: Transcorp buys and sells every type of foreign currency. It also purchases and sells all travellers’ cheques. This benefit gives you a secure foreign exchange option no matter where you go!
  • Easy Stock Maintenance: Transcorp allows you to maintain foreign currency stock. This service reduces your forex fears and lets you make your travel plans in peace. 
     
  • Getting Travellers’ Cheques from International Brands: Travellers’ cheques from brands like American Express are available with Transcorp. This service helps you leverage the famous network of this international brand. 
     
  • Converting and Re-converting Foreign Currencies: Transcorp offers both conversion and re-conversion support. This service lets you swap your excess foreign currencies back to domestic money whenever you need it.

    Conclusion

    The currency exchange services offered by Transcorp are perfect for all your foreign exchange need. With their help, you can get seamless currency exchange whenever you travel internationally or complete a foreign currency transaction.