2016 Global Foreign Exchange Survey

Analysis

Continued evolution

2016 Global Foreign Exchange Survey

The Deloitte Global Treasury Advisory Survey was crafted in response to the recent high profile coverage and impact of Foreign Exchange on business. The survey is comprised of 133 corporations from around the globe, representing a wide array of size, geographies and industries.

Key highlights in the survey

  • 2016 is expected to exhibit similar levels of FX 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 FX volatility. The Brexit referendum is causing particular volatility for Sterling.
  • Corporates’ ability to manage currency risk effectively will therefore continue to be tested in 2016 and the survey considers challenges, the board agenda, treasury structures, hedging strategies and the use of technology.
  • The lack of visibility over FX exposures and of reliable forecasts, and the manual nature of exposure quantification is a challenge for nearly 60% of corporates. Without accurate measurement, risks cannot be managed effectively.
  • Boards do not always receive sufficient information in relation to FX risk according to 37% of corporates which limits the board’s ability to challenge and guide. Treasurers have an opportunity to review their reports and to communicate key FX risk metrics aligned to wider financial and strategic measures. Boards should challenge why 11% of respondents manage year on year performance and predictability which feels low given the need to manage investors’ and stakeholders’ long term expectations and value drivers.
  • Primary hedging strategies (rolling, layering and flat hedge ratio) vary by industry, but overall hedging strategy objectives are focussed on protecting cash and minimising volatility in income statements.
  • Technology and innovation are recognised as important enablers to achieve efficient and effective FX processes, yet many organisations still deal with a multitude of source information systems with limited interconnectivity. 59% of corporates use two or more information sources to identify exposures with 62% of corporates relying on manual forecasting processes.
2016 Global Foreign Exchange Survey

Key survey findings

“As the saying goes, you can only manage what you can measure. Without a good grasp of the company’s exposures, impact from currency rate movements cannot be anticipated, communicated or controlled. The recent bout of Asian currency volatility is certainly causing organisations to review their existing practices.”

 

Benny Koh, Treasury Advisory Services Leader at Deloitte Southeast Asia

Previous Deloitte treasury surveys

2015 global corporate treasury survey

Did you find this useful?