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4 Essential Steps for Managing FX Risk Through Effective Scenario Analysis

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11 April 2024

Written by
Jack Sirett

Jack is a Partner at Ebury where he leads our efforts for AIM's engaging in capital deployment across a number of emerging market geographies.

Navigating the complex world of foreign exchange can be daunting for any business. By following these steps, you can leverage FX scenario analysis effectively to protect and enhance your company’s financial well-being:

Embrace Scenario Analysis as a Necessity

Implement scenario analysis as a key part of your financial planning to counter the unpredictable currency markets and to manage international costs effectively. FX scenario analysis helps financial leaders navigate potential exchange rate changes and their impact on the company’s finances, ensuring preparedness despite fixed annual budget constraints.

Tailor to Your Businesses’ Unique Goals

Adjust FX scenario planning to fit your unique risk profile and financial aims. As there’s no one-size-fits-all solution, it’s crucial to fine-tune analysis to your firm’s specific needs, whether that’s protecting profit margins or pursuing currency gains. This personalised approach uncovers a range of financial possibilities, enhancing strategic decision-making.

Simulate Outcomes

Embed scenario analysis in your business strategy for proactive risk management. Projecting different market conditions — Bullish, neutral, or bearish— prepares you to handle potential currency shifts. Examining various future events (whether economic data releases, or global elections) and their potential influence on exchange rates allows your company to have a deep understanding of the potential fluctuations at hand and the inherent risks they carry. This analysis enables informed, data-backed decisions, strengthening your company’s financial resilience to the unpredicatability of market movements.

Specialised External Support

If managing FX risks internally is overwhelming, consider partnering with external experts. Companies like Ebury can take over currency risk forecasting, providing clear guidance and tailored strategies to help navigate the complexities of currency management effectively.


Design a more effective FX risk management framework and increase your profitability with our FX playbook.

To enhance your understanding and application of these steps, Ebury’s comprehensive FX Playbook can be an invaluable resource. This playbook outlines best practices, innovative strategies, and real-world examples to guide you through the intricacies of FX scenario modelling.