THIS IS QUEENSBOROUGH
queenschamber.org
EXPERT ADVICE
PROTECTING AGAINST EXCHANGE FLUCTUATIONS
BY KRISTEN BURKE
As businesses in the United States struggle in the wake of the COVID-19 pandemic, they’ve had to mitigate risk, preserve cash, and implement strategies to protect themselves from turbulent economies, both domestic and foreign. Foreign currency exchange rates can fluctuate greatly due to factors like unemployment, civil unrest, trade deals and more, and these fluctuations can translate to unanticipated losses for your business. For example, if your business makes a deal to sell a product to a company in Germany for 50,000 Euros, and at the time of the deal, a Euro is worth approximately $1.10 U.S. dollars, your business would expect proceeds of $55,000. However, if the exchange rate drops by the time of delivery and payment to $1.04, you would only net $52,000. Ultimately that foreign exchange fluctuation would cost your business $3,000. And that’s just on one deal. Obviously, if the exchange rate goes up, your business could potentially benefit, but it’s a gamble. Fortunately, there are a number of strategies your organization can implement to reduce the risk of losing money due to fluctuations in foreign currencies. • Deal Only in U.S. Dollars. Perhaps the easiest strategy is to only invoice or pay in U.S. dollars, thereby removing any exchange or transactional risk. However, some foreign partners may charge you considerably more if they have to take on the exchange risk themselves. • Open a Foreign Currency Bank Account. Another option is called “matching,” where your business opens a foreign bank account and uses foreign currency payments to pay foreign suppliers. Again, this reduces the risks involved with the need to
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exchange funds. • Negotiate a Foreign Exchange Contract. A popular and effective hedging strategy is to use a foreign exchange contract, where your business and your foreign partner lock in an agreedupon exchange rate for a set date in the future. • Conduct a FX Swap. A foreign exchange swap (FX Swap) is appropriate if you need a foreign currency for a short term and then will need to trade back to your base currency. This involves two transactions: the purchase of one currency for another, and then, purchasing back your origi-
nal currency at an agreed upon point in the future via a foreign exchange contract. • Perform a Currency Swap. A foreign currency swap is an agreement between two parties to swap the principal and interest payments on a loan made in one currency, for payments of equal value in another currency. If your business is taking out a loan in a foreign country, this strategy may give you better interest rates. Bottom line: During these economically challenging times, strategies to minimize the impact of foreign currency fluctuations on a company’s operations could protect margins and reduce operational risk.
Kristen Burke is senior vice president and Commercial Banking Division head for Queens, Brooklyn and Long Island for Valley Bank. She can be reached at (516) 465-2359 or Kburke@valley.com.
STEPS TO HELP YOU ACHIEVE YOUR GOALS BY FAZEEDA ABDUR-RAHMAN PH.D., LCSW It’s a new year, which means for many of us we would like to embark on experiencing new and better things. We may think about how we can improve ourselves, our lifestyles, and our relationships with others in our lives.
BALANCE
As we think of goals we want to achieve in different areas, be it health, wealth, career advancements, or growth in other ways, it’s important that we take a holistic view of what we need for our betterment, as well as for the betterment of our relationships with others. As we plan ahead, an important theme I believe is balance. Whatever our goals may be, it’s important to keep them in proper perspective and consider how to achieve them in a way that allows for wellness mentally, emotionally, and physically, as well as spiritually. Deciding on our priorities and
balancing time put towards our goals according to our values can help align us in the right direction. Goal attainment is important, but not important enough to jeopardize health or relationships.
CONSISTENCY
As a mental health professional that focuses on supporting women, I often hear about the difficulties of goal attainment. Common goals for women are self-growth and weight loss. Women may start off on a strong path toward achieving their goals, but sometimes because of exhaustion or laziness, progress becomes less and less, or may even stop altogether. Starting off with big goals is an important early step towards goal attainment, but implementation is also important. No matter the specific goal, the best way to achieve them is through consistency. Consistency can be a big challenge for many of us, especially if we have no one to hold us accountable, so obtaining help to
Dr. Fazeeda Abdur-Rahman is owner of Vibrant Women Wellness Counseling (VWWC), a Christian-based mental health company located in Queens. She can be reached at drfazeeda.rahman@gmail.com or (718) 844-5390. Learn more at vibrantwoman.me. keep focused is important.
FOCUS
Figuring out how we can keep moving towards our goals can be the difference between success and failure. An important step is getting focused. One way to do this is by having an accountability person to CONTINUED ON PAGE 19
