There are options for domestic companies exporting overseas
Exporters and importers can hedge their risk when it comes to foreign exchange, writes Michael Ade
Despite the continuous recovery in global commodity prices from the lows recorded in December 2015, it is still too soon to tell whether the positive trajectory will continue. This is due to efforts by China to rebalance its economy and the protectionist policy of the US on steel and aluminium imports, which may just be a precursor to enhanced trade wars that would have dire consequences for all. The imposition of an import tariff on all steel products by the US, a leading global steel importer, could lead to a fall in international steel prices due to a combination of lower demand and a corresponding oversupply from China. A trade war between China and the US has the potential of constricting an uptick in world growth, knocking on to temporary exchange rate shocks as capital flows respond to changes in expected returns. Domestically, production in the metals and engineering subcomponents sector continued to be variable and local steel consumption is still low, compelling many busin...
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