See how exchange rate movements affect your margins. Enter your products and model mild, moderate, and severe depreciation scenarios.
Your home (selling) currency vs. your supplier's currency.
How much does your home currency weaken against the supplier currency?
Enter your products with selling price in GBP and supplier cost in USD.
Configure your currency pair, scenarios, and products, then click Model FX Risk.
FX (foreign exchange) risk for importers is the risk that your home currency weakens against your supplier's currency, making your imported goods more expensive without any change to the supplier's prices. For example, if you sell in GBP but pay your Chinese supplier in USD, a 10% fall in GBP/USD increases your effective cost by approximately 10%.
The FX Risk Modeller shows you your current margin, then simulates three scenarios of currency depreciation: mild (5%), moderate (10%), and severe (20%). For each scenario, it calculates your new margin and flags products that become loss-making.
The break-even exchange rate is the exchange rate at which a product's margin falls to zero — i.e. the rate at which you stop making money. If the current rate is well above your break-even rate, you have significant buffer. If it's close, you're exposed.
Common approaches include: forward contracts (locking in an exchange rate for future payments), pricing in the supplier's currency, building a currency buffer into your margins, diversifying suppliers across multiple currency zones, and hedging via FX options. This tool helps you understand your exposure before choosing a risk management strategy.