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Western Union Enables FX Hedging For Hong Kong SMEs

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Western Union Business Solutions is targeting Hong Kong SMEs in an effort to support their interest in FX hedging and risk mitigation. A report on Tuesday (June 14) said the company is launching a new product in Hong Kong, FX Options, that will service small businesses that engage in cross-border trade.

Cross-border operations can expose companies to an array of risks, including foreign exchange risk. According to Western Union, its newest tool for Hong Kong SMEs provides capabilities for favorable currency movements, reports said, while hedging against risk in the case of unfavorable FX fluctuations.

"FX Options can help SMEs manage currency risk by guarding against negative market shifts, as well as giving business owners the opportunity to take advantage of favorable movements in the exchange rate," said the company's regional director for APAC, Middle East and India operations, Simon Glendenning.

Managing FX risk, he continued, is key for a corporate's bottom line.

"FX Options enable SMEs to predict their cash flow more accurately and develop more reliable business forecasting," Glendenning stated. "This helps SMEs to focus on their business, rather than worrying about cash flow challenges that impact their ability to purchase products or disrupt their supply chains."

Western Union Business Solutions cited research that revealed the majority of SMEs in Hong Kong are only made aware of the true cost of an international invoice after the payment has already been made. A higher-than-expected payment, the firm noted, can thwart business growth.

A separate study conducted by East & Partners earlier this year found that less than a quarter of SMEs across the U.K. and France prioritize FX risk exposure mitigation; that number declines the smaller a business gets, researchers noted.

Around the same time that research was published, Western Union Business Solutions published its own findings on SMEs' expectations for their exposure to risks associated with going global.

A strong U.S. dollar, the company said, combined with other currency conditions across the globe, collectively impact national economies, large and small. "Small businesses' sensitivity to commodity pricing highlights the delicate nature of this segment's profitability," said Western Union Business Solutions North American Managing Director Scott Smith at the time, "which can be offset by payment strategies, such as currency hedging."

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