The development in international trade have resulted in the emergence of a new brand of manager called the forex manager. The forex manager is a category apart from the finance manager or the treasury manager. He deals in currency and money but not of one country. He has to transact with a number of counter parts both in the domestic and abroad. He is face to face with special kind of risk. Yet his vocation is full of opportunities and challenges.
Essential qualities or skills of a forex manager
For effective management of forex transactions, the forex manager is expected to have the following skills:
1. Awareness of historical development of world trade: The Forex manager must have a fair idea of as to how the world trade has reached its present status. The shifting power of alliances, emergence and decline of economic superpowers, present political situations, trade patterns etc. should be known. This knowledge base enables the manager to view the current situation in proper perspective.
2. Ability to forecast future trends: The Forex Manager must be in a position to derive an accurate forecast of the future trends in international trade flows and exchange rare patterns. This forecast helps the manager to prepare his forex budget.
3. Comparative Analysis Skills: The forex manager should be able to carry out a comparative analysis of costs of domestic and imported raw materials, price of local sales and export sales, shipping rates, insurance costs etc. in order to determine whether it is expedient to produce locally or to outsource.
4. In-depth knowledge of forex market: The forex manager is expected to have in-depth knowledge of functioning of foreign exchange markets, their rules and regulations, the size of their operation, the profile of active currencies, strength and weakness of the domestic currency etc. in order to achieve better pricing of deals.
5. Knowledge of interest rates: Since interest rates have a direct bearing upon exchange values, awareness about the domestic and international interest rates enables the forex manager to form an accurate opinion about the forward premia.
6. Willingness to undertake risk: Armed with the knowledge and awareness about international financial and trade patterns, currency positions and interest rates, the forex manager should have the ability to undertake reasonable level of risks with a view to profit from forex exposures.
7. Hedging strategies: The forex manager should be in a position to hedge his positions to the best extent possible. To achieve this, a sense if timing is essential in the background of ever changing world of exchange values.