Citadel Global Managing Director, Bianca Botes, provides insight into how businesses and investors should rethink their approach to currency risk, moving from short-term, volatility informed decision-making to strategic positioning that is resilient across multiple market scenarios.

In today’s volatile market environment, currency movements are increasingly reshaped within hours by geopolitical events and other external market factors, creating frequent shocks in the system that can negatively impact businesses. To adapt, businesses can no longer treat foreign exchange (FX) and treasury management as short-term transactional or reactive functions.

FX and treasury management need to evolve into a structured, forward-looking discipline that actively protects business performance and preserves value through uncertainty. Businesses and investors should rethink their approach to currency risk, moving from short-term decision-making to strategic positioning that is resilient across multiple market scenarios.

How Forex and treasury functions are shifting

FX risk is no longer cyclical in the classical sense. It is becoming structurally event-driven.

The pattern of long, gradual currency cycles punctuated by occasional shocks has given way to bursts of intense volatility triggered by geopolitical developments, central bank repricing or sudden shifts in global risk appetite. The risk businesses face is not simply that the rate moves against them, it is that the move arrives faster than their decision-making process can respond. FX has shifted from a treasury input to a board-level strategic concern.

Markets are no longer linear

Three converging forces are making currency movements more unpredictable and event-driven. Firstly, geopolitical fragmentation, from Middle East conflict to US-China trade tension and ongoing sanctions disputes, is generating headline risk on a near-weekly basis. Secondly, monetary policy expectations are recalibrating in real-time as central banks respond to inflation, growth and financial stability concerns simultaneously. And thirdly, market structure has changed, and algorithmic execution and concentrated liquidity windows mean that when sentiment shifts, the move happens in minutes rather than days.

The result is currency pairs that can travel three to five percent on a single headline.

This volatility translates into significant real-world business risk. For importers, it manifests as margin compression, while exporters face revenue uncertainty that distorts pricing and reinvestment decisions. Even a two to three percent adverse move can absorb the operating margin on thin-margin product lines, making the cumulative effect across the year far larger than the headline volatility suggests.

Discipline over prediction - Four common mistakes businesses make: waiting for certainty before acting, treating FX as a single decision rather than layered ones, mistaking a forecast for a strategy and poor governance.

Too many businesses still execute FX through a finance team without clearly defined risk appetite, cover ratios or escalation triggers, which means decisions get made under pressure rather than under structure. Waiting for certainty often results in missed opportunities or forced decisions at unfavourable levels.

The businesses that succeed at timing are not the ones predicting better; they are the ones who happen to be right once. A structured approach delivers a consistent average rate across the cycle and removes the emotional element from execution. The mathematics of consistency beats the mathematics of prediction over time.

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