Currency Hedging Crucial in Run-up To UK Election

Commentary by Carl Hasty, Director of international payment specialist SmartCurrencyBusiness.com

“A recent article in Reuters posits that hedging against sterling will be more expensive as the May 7th election nears, particularly against the euro and US dollar.

Although this may be the case, businesses should be aware that this would be the lesser of two evils, the worse-case scenario being that they will have to throw themselves upon the mercy of live or ‘spot’ rates, which could move even more unfavourably in their favour.

We saw how the vote on Scottish independence affected currency markets last year. It is likely that the elections will also influence markets significantly.

Businesses that know that they will need to be purchasing currency in the run up to the election need to have clear strategies, most of which should involve hedging their currency purchases to protect their bottom line against risk. This is also a prudent move post-election, when the dust settles from whatever results.”

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