Monday, January 27 11:41:46
Irish companies doing business in Asia should start to trade directly in local currencies rather than incurring additional fees trading through the US Dollar, according to a research note issued today by Clear Currency.
In its Asia Currency Outlook 2014 Clear Currency argues that the US Dollar is expected to gain against emerging market currencies this year as the US Federal Reserve tapers its quantitative easing programme.
Trading directly in Asian currencies like the Chinese Remenbi or Japanese Yen avoids costs associated with an additional step of changing euros for US Dollars, furthermore companies in Asia will often give discounts to trading partners can settle in local currency.
Peter O'Flanagan, Head of Trading at Clear Currency says: "Traditionally Irish businesses trading in Asia would buy and sell goods in USD. However with the USD set to appreciate in 2014, even against the Euro, this may become an expensive way of doing business. An HSBC survey in China outlined that more than half (53pc) of Chinese businesses surveyed would offer a discount of up to 5pc for transaction settled in Renminbi, and this is something we've experienced throughout the Asia region."
An Irish business changing E50,000 per month into Asian currencies could save itself as much as E30,000 per year by starting to trade directly in local currency, said Mr O'Flanagan.