FX volatility rises with political change

As we welcome the new year, there are many major countries around the globe in the process of bringing in new leadership, with new parties in power. The potential for differing economic priorities creating shockwaves that impact international trade is increasing.

Now is a good time to remind everyone that FX rates are merely the clearing prices of all the global activity that is taking place every day, every second. FX rates need to absorb flows related to debt issuance, tariffs, commodity and energy shocks, shifts in investment preferences, impacts of AI, etc.

Speaking of AI, before the robots take over, we’ve managed to harness their power for what is an ideal use case—bridging the gap between the forecasting detail that Treasury requires to manage FX risk and what FP&A is typically able to provide.