Business FX Guide

Currency risk

Know what a rate move costs you

A guide to identifying your currency exposure, comparing hedging approaches, and pricing conversion costs before they reach your margin.

A small finance team reviewing a printed currency exposure sheet on a wooden desk beside a laptop, with a rate chart open on the screen and natural window light across the papers.

Understand What Moves Your FX Costs

Three parts of a cross-border payment decide what you actually pay, and each can be checked before the trade is booked.

Close view of a currency dealer's dual-screen setup showing two live rate charts side by side, a printed rate confirmation sheet and a pen on the desk, daylight from a window

The Rate You Are Quoted

A business quote is built from an interbank reference rate plus a markup. Ask which reference is used and when it is sampled, because a rate captured at a quiet moment and one captured after a data release are not the same number. Compare quotes against the same timestamp rather than against a headline rate you saw earlier in the day.

Read FX market analysis
Payment instruction form and bank correspondence on a desk with a calculator, showing a transfer amount and deducted charges circled in pencil

Fees Beyond the Spread

The markup is rarely the whole cost. Fixed transfer fees, receiving-bank charges, correspondent-bank deductions and minimum ticket sizes all land on the same payment. A low markup on a small transfer can cost more in total than a wider markup with no fixed fee, so compare the all-in amount the recipient receives, not the quoted rate alone.

Review conversion costs
Finance manager marking a calendar three months ahead beside a folder of supplier invoices, with a currency chart printout on the desk

Timing and Exposure

A payable due in three months carries currency risk until it is settled. Leaving it unhedged is a decision, not a neutral default: the rate can move either way, and the budget absorbs the difference. A forward contract fixes the rate for a known date but removes the upside too, and it usually requires a deposit or credit line. Match the instrument to whether the amount and date are certain.

Explore FX hedging strategies