Business development Praseeda Nair · 8 March 2017
Currency volatility becomes biggest challenge for small UK exporters
Depreciation of the pound since the EU referendum has significantly affected the way business owners manage exchange rate risk, as new research reveals the impact of currency volatility on small exporters. In a survey on the attitudes of small business owners trading internationally, risk management firm AFEX found that 71 per cent of exporters saw currency volatility as the biggest threat to their ability to manage currency risk. Currency risk, or exchange rate risk, refers to the possibility that the devaluation of domestic currency could impact on the value of exported goods. Since the Brexit vote in June 2016 the pound has significantly depreciated in value, falling by over 18 per cent next to the US dollar. One common response to currency volatility was to increase the prices of goods and services. Over a third of small exporters claimed to have raised prices since the Brexit vote, while 17 per cent expected to raise prices over the next three months. The findings suggest an end to a honeymoon period? for small exporters that saw many capitalise on the initial devaluation of the pound to offer goods at a cheaper rate overseas. Small business owners responding to currency volatility by raising prices followed high-profile price increases at Microsoft, Apple and Tesla. Despite the uncertainty, over eight in ten expected to maintain or increase their levels of international trading throughout 2017. Some one in ten exporters claimed currency volatility had accelerated? business growth. Commenting on the findings, AFEX CEO Jan Vliestra concluded that the effects of Brexit were looming large? for small businesses trading internationally, as concerns over currency volatility grow.
ABOUT THE EXPERTPraseeda Nair
Praseeda Nair is an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.