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We ask: What use is vivid analysis if your currency strategy is flawed?


Rather than serving as a critique on the ways our peers might 'have it wrong' this post is designed to outline what tools and techniques you have at your disposal to actually act on market commentary or verbal analysis provided by your broker.

One look at the Prime Cap Library and you should notice that our posts are a little light on dissection of the previous day's or even weeks' currency movements.

You'll be met with case studies and comment about the contracts and concepts that contribute to a better understanding of currency services and a better use of over-the-counter instruments tailored to every currency eventuality.

One of the reasons most currency brokers publish a market report is because it is a simple and rather un-invasive way of gaining access to your inbox.

We don't mean that in a insister way; we simply mean that an email from 'Best Exchange Rates.com' when you arrive in the office keeps that brand 'front of mind', subtly or even not so subtly, and might make for interesting reading in terms of interpretation of data the market has already received.

However, such daily or weekly commentaries tend not to outline how a particular contract or approach might have been used in a particular circumstance in order to remove your downside risk or to maximise the rate.

Commentary, when it comes to currencies, if by definition retrospective. One only really comments on something that has happened. Commentary on things yet to occur is speculation when you're dealing in an arena as volatile and reactionary as capital or currency markets.

So, we ask, what use is all this interesting, expressive and invariably macho analysis/commentary when it is not tied to an action plan constructed for you and tailored to the outcomes being discussed?

We think not much.

It is just room meat. Padding. Marketing and advertising at best and a new daily lining for your recycle bin at worst.

There is nothing in any of the daily reports from non-bank brokers that you cannot read in a daily newspaper on your way to work. A brief conversation with an experienced currency broker can tell you more in a sentence than their bland typed platitudes.

If demand for oil is going to fall because of action soon to be taken by governments to limit the dissemination of single use plastics, what use is that to you when you're settling an invoice with your European supplier?

Sure, having an awareness of the concerns and obstacles faced by one currency or another as the year progresses is something most in the world of finance should possess, but, if you don't apply those sentiments to a meaningful, disciplined and concerted approach to your currency exposure management, then your business certainly won't be any better off and you will have just wasted the time it took you to read that which the evening news already told you the night before.

Knowing what you don't know and asking an albeit self-professed collective of experts to break-down the concepts and the best way to tackle something, is a very good way to get more than just a tight spread from your currency broker.


Test their metal.

Ask your 'dedicated currency dealer' what tools they can suggest to make sure that your next payment is conducted at the same rate as the payment you're making today.

There are a number of things your currency broker can do that your bank won't and there are even more ways to approach devising solutions for the optimisation of your currency activities, whether that be through process improvement, cost efficiencies or top-line price improvement.

When it comes to currency, headlines are just as influential as more macro studies of a sector or of Central Bank and Government policy.

Smelling a trend and acting on it means you can prepare yourself and your business; furthermore, you can mitigate, as far as is reasonably possible, the effects of one outcome whilst leaving the door open for upside benefits.

Do you have a currency strategy?

You engage in currency exchanges and send, receive, hold currencies to a greater or lesser extent....correct?

What stops you from considering the effects of positive and negative changes in the rate?


It matters not whether you are an independent retailer buying key rings from one supplier in Taiwan twice a year or a firm with multiple offices globally.

You have just as much on offer to you as a business with manufacturing operations in Eastern Europe or a non-UK domiciled landlord bringing rental income back to your country of primary residence.

Emphatic though our language may be, as an independent boutique Prime Cap knows how dismissive one can be of one's own position, but, we also know that every penny earned is hard won and we feel our would-be clients owe it to themselves and to the customers they've fought so hard to win to make the most of simple, effective and easily applied tools and services.

Do not dismiss the email that comes in to your inbox from 'Aren't We The Most Eloquent Currency Company Ltd.'

Keep it, read it, but, follow up on it and ask the person sending it to you how it's content applies to your next payment.

It is not a case of asking 'what would you do?'.

A currency broker does not run their own business, does not deal with myriad of moving parts. They can price a foreign exchange transaction and should be able to explain how best to optimise your use of them, but, the question you should be asking of them is 'is this the best way to reduce my costs and protect my margin'.

Everything else is just filler.

#review #Currencies #analysis #commentary #alerts #strategy

Prime Cap Payments Limited (T/A Prime Cap | Prime Cap Payments | Prime Cap Global Payments) is registered in England and Wales No: 10755730. Registered address: 27 Old Gloucester Street, London, WC1N 3AXPrime Cap is partnered with, and a programme manager of, Ebury Partners UK Limited who provide Prime Cap's FX and payment services.  Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution (Financial Services Register No. 900797) and is registered in England and Wales (registered no. 7088713). Registered office: 3rd floor, 100 Victoria Street, Cardinal Place, London, SW1E 5JL.  Ebury Partners UK Ltd is registered with the ICO with registration numnber ZA345828.