Relax – this is not a political blog (regardless of how much we’d wished for ‘All the President’s Men’ to be on top of this risk).
In a nutshell, it seems that the financial exposure from Trump’s golf business related debt was based on US Dollars to be paid back – not British Pounds. This has resulted in an FX shortfall to the tune of $40-million.
“His Aberdeen course started racking up debts from the beginning of its operations in 2006, when £1 was worth nearly $2. Now, £1 is worth just $1.42 (as of 09th June 2021).” Business Insider
That is almost a 30% move in the FX rate since 2006 and it seems like the financial team was caught sleeping at the wheel. Let this be a lesson to everyone, that no one – not even a golf course business (much less the global commodities markets) – is immune to variables such as FX.
As commodity traders go global with opportunities galore, FX risk management has become a necessity that requires vigorous, near real-time management. Traders and treasury groups managing FX risk should not just be on top of their currency exposures at any given moment, but they also need to be able to subject their exposures to various scenarios that would provide insight into ‘what could happen’.
CTRM solutions offer the ability to calculate FX exposures between the book currency and the trading activity. CTRMCloud can do this plus provide advanced analytics on the impact of exposures due to multi-dimensional scenarios of simultaneous price and FX movements.
If golf courses were a commodity, we could have offered the Trump Organization our platform. But if you are a commodity trader or broker, we can help to keep you not just up-to-date but rather in the moment of your FX exposure.
CTRMCloud offers CTRM as a service, allowing for data to be collected, analyzed and reported in near real time from all areas of the business. Contact us to learn more.