A deal between Australia’s export credit agency Efic and global foreign exchange specialist AFEX is intended to protect Australian exporters against unfavourable shifts in exchange rates.
Under the agreement, Efic can guarantee foreign exchange facilities offered by AFEX to SME exporters. This will enable the foreign exchange specialist to increase the trading limit on the foreign exchange facilities it provides to Australian companies.
For SME exporters, this means they will be able to protect more of their export contracts against the risks of currency exposure and better secure their profit margins.
A foreign exchange facility can help SME exporters protect themselves from exchange rate fluctuations by locking in exchange rates and allowing them to hedge their currency exposure.
“Adverse movements in exchange rates are an inherent risk of doing business overseas, but now SME exporters can limit their exposure to currency risk enabling them to focus on their export operations without the worry of volatile currency markets,” said Alex Fernandez, Efic’s Head of Alliance & Product in a statement.
The deal follows the recent survey by Efic which showed that Australian SME exporters’ confidence has risen, with 36 per cent of active SME exporters expecting overseas sales to increase in the next 12 months. Overall, 94 per cent said exports will increase or stay the same.