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INTL FCStone’s Carsten Hils discusses the impact the current crisis has on FX markets



The current worldwide healthcare crisis has had a massive impact on the global economy. While we’ve seen increasing coverage on how these actions directly impact local economies, the impact on FX markets is not as widely discussed.

Carsten Hils FCStone
Carsten Hils, INTL FCStone

Carsten Hils, Global Head of INTL FCStone’s Global Payments Division, joins LeapRate today to discuss the Global Payments Network and the intelligence it is currently providing in emerging/developing world countries.

INTL FCStone’s Carsten Hils discusses the impact the current crisis has on FX markets

LR: Hi Carsten, can you let us know more about INTL FCStone’s Global Payments Network and why it is important to those in the FX sector?

Carsten: The Global Payments Network (GPN) is a comprehensive intelligence portal that leverages INTL FCStone’s Global Payments Division’s relationships with global correspondent banks, regulators and other market participants around the world, to provide clients with access to market news and analysis.

While this platform helps facilitate payments and FX trading in times of normal market activity, it has become more essential to users as it provides regular and timely updates on whether the stock market, or the whole financial system in a given country is closed or operating under a modified schedule.

At this time, we have about 10 countries where the current crisis has had a major impact including Honduras, Jordan, and Nepal which have enacted temporary lockdowns that have impacted their local financial systems creating delays in execution & settlement for FX market participants.

LR: Indeed governments in emerging market countries like Honduras, the Maldives, Jordan, etc. are either closing entirely and/or shortening their banking the hours of their banking systems, severely diminishing the ability for cross-border payments and FX transactions. Where does the GPN stand in this situation? What is the impact on global banking?

Carsten: The main role of the GPN during this period is keeping clients abreast of the latest market changes and on the ground intelligence that we’re receiving from our network of more than 350 correspondent banks. The short-term impact is that payments cannot be made or are delayed in the countries that have established lockdowns for their financial system. In some countries we can only process reduced number of payments, while in others all or only select number of bank branches are closed due to travel and work restrictions. The GPN communicates these changes in the status of execution and settlement of payments to these countries in real time.

In the long run, we anticipate will see a reduction in financial market liquidity which will have an impact on the global banking community as a lack of liquidity will reduce lending between banks.

LR: The current worldwide healthcare crisis has already had a massive impact on the global economy. While we’ve seen increasing coverage on how these actions directly impact local economies, the impact on FX markets is not as widely discussed. What impact do you think this will have on FX markets and how do you think the FX sector will cope with the issue in 2020?

Carsten: The pandemic we’re facing will impact the more than 175 countries we cover in various ways over the coming months. We expect delays in both settlement and execution in those countries that have lockdowns or plans to enact lockdowns that apply to their local financial system. As this continues, we anticipate the banks in our network to find unique solutions that will allow them to operate properly during an extended lockdown.

While the outbreak is top of mind for everyone it’s important to remember that this occurred as several major trends were developing in the FX markets including currency weakness in the emerging markets, a mixed picture of the G20 type currencies, and questions about the strength of the Dollar overall.

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INTL FCStone’s Carsten Hils discusses the impact the current crisis has on FX markets

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