2016 global foreign exchange survey

2016 Global foreign exchange survey

2016 is expected to exhibit similar levels of foreign exchange uncertainties as 2015, with different expectations around interest rate policies, quantitative easing removals, potential depegging of some currencies and other actions by global economies all driving foreign exchange volatility.

Key findings

• Treasury challenges—Lack of visibility into FX exposures and reliable forecasts, as well as the manual nature of exposure quantification, is a challenge for nearly 60 percent of respondents. Without accurate measurement, risks cannot be managed effectively.
• The board agenda—According to 37 percent of respondents, boards do not always receive sufficient information in relation to FX risk, which limits the board’s ability to challenge and guide. Treasurers should consider opportunities to communicate key FX risk metrics aligned to wider financial and strategic measures.
• Hedging strategies—Primary hedging strategies (rolling, layering, and flat hedge ratio) vary by industry, but overall hedging strategy objectives are focused on protecting cash and minimizing volatility in income statements.
• Treasury structures—Organizations with centralized models report a higher number of benefits and fewer challenges than those with decentralized models.
• Use of technology—Technology and innovation are recognized as important enablers to achieve efficient and effective FX processes, yet 59 percent of corporations surveyed use two or more information sources to identify exposures and 62 percent rely on manual forecasting processes.