FAQ > Managing FX Risk

How do I manage FX risk?

FX rates are very difficult to predict but you can take educated guesses at likely movements. Every business and transaction is different, but It is important to understand your budget levels.


If you worked out you need to purchase USD against GBP at 1.6500 to break even and the current FX rate is 1.6300, you are buying below your budget rate, hence will incur a loss.


To mitigate this you could have bought a forward at the rate of your budget level or higher (if the FX market was at or higher this level). This would remove the fluctuations in FX rates you would face as you would have essentially locked in your rate.