Spotlight on Ebury’s Chief Risk Officer

Claire Hogarth11/Sep/2014Currency Updates

Currency risk should be an important consideration for all businesses operating internationally. Volatility in the currency markets can have severe effects but mitigating this exposure is achievable through effective risk management strategies and in depth knowledge of the markets.

Chief Risk OfficerEnrique Diaz is Ebury’s Chief Risk Officer and heads up the analysis team in New York. Enrique’s drive, passion and in depth knowledge of the subject area has led him to be recognised by Bloomberg as an accurate currency market predictor and so brings to Ebury a level of expertise which can be passed onto clients as valuable market insight.

Before joining Ebury, Enrique worked in capital markets as a Portfolio Manager operating mainly in currencies and interest rates from a macroeconomic perspective. He worked in this position for several hedge funds in New York and Madrid, as well as at Société Générale in New York where he was Managing Director. Enrique holds a doctorate in Telecommunications Engineering from Cornell University.

Enrique’s knowledge is passed onto clients in real-time conditions so that they can take advantage of favourable rates and his reports provide updates on macroeconomic and political data, building on insight from all major international banks.

In this staff spotlight, we catch up with Enrique on risk management and look ahead to potential volatility in the currency markets.

What separates Ebury from the competition?
Ebury has the widest portfolio of currencies and spot/forward products. Our currency specialists help clients meet the demands of complex exposure to the FX markets and structure optimal, lowest cost hedging strategies.
Ebury’s Analysis and Strategy team also follow more Emerging and Frontier markets than any of our competitors. This enables our clients to enjoy bespoke analysis and reports on currencies ranging from the euro and the dollar to the Sierra Leone leone and Papua New Guinea kina.

What do hedging solutions consist of?
In the most basic sense, they fix future exchange rates at or near today’s levels. In reality, mitigating currency exposure can involve a complex system of multiple risk management strategies, devised by a specialist in the markets and designed to give you a stable and beneficial exchange rate.

Are these hedging solutions different for emerging market currencies?
Emerging market currencies often have restrictions as to who can trade them and under what circumstances. Ebury has access to trade a multitude of emerging market currencies and can move money into developing countries through our network of local banks. We also offer a wide variety of products to solve the issue of emerging market currency risk, such as non-deliverable forwards (NDF) and synthetic forwards.

What qualifies Ebury as a contributor to Bloomberg currency forecasts?
At Ebury we have years of experience working in capital markets and we’re also backed by top ten rankings in a variety of FX crosses. Our successful predictions, across many G10 and emerging market currencies, mean that our insight is often sought.

Who can benefit from this expertise?
Ebury works with a variety of organisations from large corporates to SMEs, importers/exporters, e-commerce traders and many more. We also have a thriving base of charities, NGOs and development organisations that all mitigate their currency exposure to protect their donations and secure a lasting exchange rate upon which to budget their overseas endeavours.

If there is one date to watch the markets in the second half of 2014, which would it be?
October 29th. This is likely to be the meeting at which the Federal Reserve announces the end of monthly purchases of Treasuries and mortgage bonds, i.e. the end of the taper. We expect their statement to also contain explicit guidance as to the future timing and magnitude of their first interest rate hikes.

What major currency risk will be key in the second half of 2014? Or early 2015?
I think the significant uncertainty around the exact timing of interest rate hikes by the Federal Reserve provides the greatest currency risk. The timing and speed of these hikes will be the key driver of all financial markets, not just FX, for the next 18 months.

What is the best way to protect against this risk?
Take advantage of current low volatility levels across most major currency crosses to hedge as much of your future exposure as possible.

Which currency is set to appreciate in value and why?
We think that the Federal Reserve will be the first major central bank to move away from zero interest rates in 2015. That, plus the increasing gap in macroeconomic performance across the Atlantic, means that the US dollar will be under appreciating pressure for the next 12-18 months.

Read more about currency volatility in our white paper, 5 Major Foreign Exchange Risks, or alternatively contact Ebury on 0845 519 1009 to discuss your risk mitigation strategies.

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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.