Model train maker Hornby has hit the buffers in a lesson to any expat or business involved in foreign exchange transactions.
The firm has signalled to the markets that £1.2 million was lost in the last three months of 2103 due to foreign currency exchange rate fluctuations – and warned another £200,000 has gone up in smoke since January.
The firm blames supply chain problems for poor trading results and is looking to refinance in the coming months.
Debt was up £5 million last year to £7.3 million at the end of March 2014.
Despite the problems, the management expect to break-even at pre-tax.
How forex buys a luxury lifestyle
Meanwhile, global bank HSBC has released some information about some odd foreign exchange transactions that have taken place this year.
Customers mainly take advantage of the bank’s foreign exchange service to remit money home while working overseas, pay school fees in another country or to buy property abroad.
However, this year’s smallest forex transaction was for just a single US Dollar, sent from Britain to the United States.
Larger transactions have been to buy a cargo ship and an empty wine cellar.
But customers regularly send cash around the world to fund luxury purchases like yachts, classic and super cars, race horses and fine art.
James Yerkess, HSBC’s head of FX for retail banking and wealth management, said: “It doesn’t matter if you are sending cash home to a friend or relative or literally pushing the boat out to purchase a yacht, foreign exchange services are a cheap and effective way to quickly move money and to convert cash into other currencies.”
The largest online transfer was £30,000 – which is HSBC’s limit for internet forex transfers.
The most popular conversions are between Euros, Australian Dollars, Indian Rupees and New Zealand Dollars.
The Chinese Renminbi is also finding favour, with most transactions flowing from Britain to Hong Kong.
Whistleblower triggers probe
In a separate report, the value of New Zealand dollar, the world’s 10th most traded currency, may be rigged, according to reports from an anonymous whistleblower working in the forex industry.
The country’s currency regulator, the Commerce Commission is investigating the claims.
Apparently, the net takes in other currencies, as similar investigations are also underway in at least a dozen jurisdictions across North America, Asia and Europe.
The whistleblower claims forex traders conspired with traders at rival banks to set foreign exchange rates by sharing client information.
