Rapid Fireside Chat with Nick Wood

What’s the top macroeconomic trends you think CFOs and treasurers should monitor right now?

2025 has proved challenging, driven by a trifecta of macroeconomic themes - global trade tensions, global conflicts, and domestic policies. All three remain relevant, with ongoing global trade tensions the most impactful due to its consequence of increased volatility and uncertainty. From my perspective, tariffs have contributed to a rise in inflation, alongside dampening investment and growth, which has influenced domestic policies, creating a challenging environment for both governments and central banks who need to balance growth and inflation. All of which has resulted in periods of increased volatility and/or trending foreign exchange markets.

How do shifts in interest rate policy affect how finance leaders manage their FX exposure?

By adjusting interest rates, central banks influence growth, inflation and exchange rates. When interest rates rise, banks and investors can earn higher returns compared to other countries, attracting foreign capital and pushing the exchange rate upward. However, this effect may be weakened if domestic inflation is significantly higher than abroad or if other factors put downward pressure on the currency. Conversely, when interest rates fall, foreign investment can become less attractive, often leading to a decline in the exchange rate. Understanding how domestic and global policies impact exchange rates is important for any company when deciding to fund or hedge their underlying investments. However, as alluded to, it’s important to remember that changes in interest rates do not guarantee a specific outcome in foreign exchange markets as their impact doesn’t occur in isolation - it depends on a range of factors.

How should businesses balance short-term volatility with long-term currency planning?

Short-term currency volatility is a natural market feature that can impact immediate profitability and cash flow, but it generally evens out over time in long-term planning. The key is to implement strategies that mitigate short-term transaction risks while remaining focused on long-term strategic goals. Whilst certain funding and repatriation transactions may be difficult to anticipate and would be executed at point of requirement, quite often more strategic investments will require a more deliberate approach factoring in cash flow, optimal instruments, tenors and hedge ratios.  

What major forces do you expect to shape global FX markets in 2026?

Certain themes from 2025 will remain pertinent, namely de-globalization and tariffs, in addition to monetary policies and whether differentiation becomes prominent between countries, but another theme which will become increasingly pertinent is de-dollarization. Analysts and investors have been talking for years about de-dollarization, anticipating a gradual shift by governments, companies, and investors away from using the U.S. dollar as the world’s default trading and reserve currency. In 2025, de-dollarization gained prominence and can best be seen in the performance of Gold which has strengthened 60% year to date. With the dollar representing more than 50% of global reserves more rotation into alternative currencies can happen, the question is will it and to what magnitude and where.

If you could fast-forward five years, what will best-in-class FX execution look like — and what role will technology play in getting us there?

Digital transformation, driven by AI and data analytics, is now essential and will become more commonplace in our day to day. It will help organizations automate routine work and access real-time insights for smarter decisions and outcomes.

Get in touch to learn more about how MillTech’s AI-driven FX solutions can help your business turn data into intelligent currency risk management, https://www.milltech.com/contact.