Money Makes The World Go Round: Just Ask OFX Boss Skander Malcolm
Skander Malcolm is CEO of OFX, a leading Foreign Exchange service provider. In this interview with International Business Today Mr Malcolm explains how Australian exporters can protect themselves against currency exchange rate volatility and where to find the most competitive rates …
International money transfers play a vital role in any successful export business, so it makes sense to secure the most competitive exchange rates and transfer fees.
“‘Better’ meaning cheaper and also faster – we are usually able to save customers up to 75% on bank rates … and most of our transactions clear the following business day after they are sent.”
“We can help by saving them real money and also providing a great service.”
OFX makes more than 3,300 transfers daily around the world across 55 different currencies, and have moved over $119 billion in international money transfers since opening its doors.
The company now has a global network boasting relationships with 159 banks.
“We use an interbank system meaning that we have access to the best security to keep your money safe,” Mr Malcolm says.
When choosing a Foreign Exchange service provider exporters should look to partner with a company that can offer them a dedicated relationship manager – someone who is a currency expert, but also will take the time to understand your business operations and weekly challenges.
“Each company will vary in terms of their rates, their commissions and their personalised service, you have to meet a few to find the one that best suits your needs.”
“The most flexible way to guard against exchange rate movement is via forward exchange contracts,” says Mr Malcolm.
“These are agreements between two parties to exchange two designated currencies at a specific time in the future. These contracts always take place on a date after the date that the spot contract settles and are used to protect the buyer from fluctuations in currency prices. This gives an exporter the opportunity to set a rate that will be acceptable to them, and when that rate comes in we can automatically move their funds. It removes the need for exporters to spend time watching the FX market each day, reducing time and stress.”
To minimise the impact of currency volatility, many exporters have a “hedging” strategy in place.
“A hedging strategy is basically a currency plan across all of your business geographies and interests.
“A specialist advisor will look at where you’re trading, what currencies you’re working with, your currency flow (how much you’re moving and how often), and they’ll look at offsetting risk in one location against another.
Mr Malcolm says now is the ideal time for Australian exporters to hedge currency risk.
“The Australian dollar has been range bound lately, but there are a number of economic pressures approaching that could see a breakout,” he warns.
“The US federal Reserve is expected to raise interest rates later this year, a decision that would see USD strength return.
“The AUD will continue to be driven by the outlook for commodity prices, as it remains a heavily weighted commodity barometer.”
Mr Malcolm says OFX can offer guidance on choosing the best planning tools.
“We offer forward exchange contracts and a range of other currency management services that can help to minimize risk and save on administration time.”