Nordea Bank Abp provides guidance on currency risk management for businesses
Nordea Bank Abp is advising businesses on managing currency risks due to heightened global volatility. The bank outlines key steps and emphasizes tailored strategies for international trade.
Helsinki – Nordea Bank Abp has released guidance for businesses on effectively managing currency and exchange rate risks. This comes amid increasing global geopolitical tensions and economic uncertainty, which have amplified currency market volatility.
The bank highlights that companies engaged in international trade, with foreign customers, suppliers, or production facilities, are particularly exposed to fluctuations in exchange rates. Recent events, such as the US elections, have introduced significant uncertainty, influencing currency valuations and adding to the challenges faced by businesses.
Nordea's 2024 Treasury Survey indicated that a significant majority of Nordic large corporates anticipate substantial currency volatility in the coming years. The survey revealed that 43% expect high FX volatility, while 53% expect moderate volatility between 2025 and 2030.
The guidance underscores the need for businesses to understand their specific currency exposures by reviewing their operating cycles and financial structures. Nordea advises developing a clear foreign exchange risk management policy and adhering to it to safeguard profit margins, cash flow, and overall financial performance.