Importers have been hit hard by volatile currency markets and need help with risk management, says Richard Arundel

January 2008: the UK economy is (seemingly) buoyant and businesses are thriving. One pound buys $2 and almost €1.40. June 2009: the pound has recovered slightly from its recent lows but still remains 20% down against the dollar and 17% down on the euro from January 2008 levels.

For companies that import most of their produce, the past 18 months have been very difficult, with the pound's rapid depreciation having a detrimental effect on bottom-line profit. Even those clever enough to buy at last year's levels are now running low on cheap currency inventory and facing hard decisions about when next to buy.

Simply putting up prices is not an option. We may be 'technically' coming out of recession but we still face the toughest trading conditions in living memory and most SMEs and smaller independents are still fighting the multinationals' power.

Trimming overheads and sourcing cheaper products is one part of the solution, but many companies have also had to turn their attention to the impact of foreign exchange on margins. The specialist foreign exchange broker sector has built itself up over the past 15 years by offering tighter "spreads" than the banks and to a large extent, broken the banking cartel. However, simply squeezing margins isn't the only thing that can be done, and better prices alone won't help combat the large swings in sterling.

Specialist brokers offer help and guidance with market timing and foreign exchange risk management - something of paramount importance in the current climate. This year has been dominated by significant volatility; in May alone we saw over 10% of movement in £/$ and nearly 5% in €/£. Do you buy dollars now or wait until the end of the week? Do you fix into a forward contract for six months' worth of euros at the current rate or buy them as and when? With regular daily movements of two or three cents (sometimes more), can you make time to monitor the markets all day?

Employing a specialist broker will give you access to an expert who focuses purely on your foreign exchange needs, pointing out risks and opportunities as they arise.

Richard Arundel is a senior FX trader at FX Capital Group.