“We are stronger inside the euro than outside”

Interview with Javier Quintana, Managing Director of Moneycorp Spain

One of the factors that have influenced the unprecedented development of the Spanish foreign sector in this 21st century has been the euro. And one of the issues that companies with international businesses must pay attention to is currency.

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To find out how currency influences internationalized companies, we interviewed Javier Quintana, Managing Director of Moneycorp Spain.

 

What significant dates or events throughout these two decades have impacted the currency market the most?

 

Javier Quintana: “I would highlight the launch of the euro in 2002, the Lehman Brothers crisis in 2008 and the current moment of parity. It is true that today we are at parity and before the launch in 2002, the euro-dollar was already trading below that parity, it even reached 0,85, but it is also true that it was an invisible currency from 99 to 2002, which is when it is officially launched, and it is launched at a rate of 1,15, approximately. From that moment until Lehman Brothers it does not stop rising against the dollar, reaching 1,60, from there it begins to depreciate little by little and from there until this week when for the first time in 20 years we have seen parity. 

 

That's as far as the euro-dollar is concerned, which is the most traded volume and the most important. There have also been other relevant moments such as Brexit in 2016, logically with a brutal 30% depreciation of the pound; the Japanese yen in the 2011 earthquake, etc. 

 

But I would stay with the euro-dollar, which is the most important: it was launched in 2002; bankruptcy in 2008, parity today.” 

 

Precisely this year marks 20 years since the euro was put into circulation. How has the single currency influenced the strengthening of the Spanish foreign sector?

 

JQ: “I would say that it is very positive, not only economically but also in sectors such as tourism, property investments… it has undoubtedly favored the growth we had. It is also true that when you belong to a group, it has limitations and possibly today we are seeing a good example. We have inflation in Spain of 10%, the logical thing would be to raise rates at full speed and the fact of belonging to a group where you do not decide, 27 members of the EU, 19 currently in the euro, forces you to be together with the group, to go at a different speed and that will mean that perhaps we will be left with long inflation for longer. But in general and in summary I would say positive, we are stronger inside the euro than outside.” 

 

How have the currency management services that Moneycorp offers to companies changed in these two decades? Do companies now request different coverage?

 

JQ: “The first thing I would say is that until 2009, in Spain at least, only banks could offer this currency service. Therefore, the moment it is deregulated, new players enter, specialists like us, and that means that the offer expands. From there the offer is expanded but the regulation and controls are also expanded, and the client, what has happened? That by having a greater supply, and above all by having greater experience, and realizing that the currency effect can have a significant impact on their commercial margins, they take it more seriously. Sophistication requires, whether it is a bank or a specialist or any type of provider, more level, more product, more strategies, and it is no longer just a matter of prices but rather giving them a service tailored to their needs.”

 

How can a company like Moneycorp help a financial department or company working abroad?

 

JQ: “We have all the means to provide a very wide range of products, each company is different, we cannot think that a product serves the same purpose for any company; Everyone has their own case, and our mission is to have the licenses that allow us to have the entire range of products so that, understanding the objective of that company, understanding the level of risk that it is willing to assume to achieve its objective, we can present a wide range of ideas, which adjust to what you intend to achieve and from there guarantee the best execution. 

 

In that sense, Moneycorp has many years of experience in the sector, we work with 20 liquidity providers and move around 60.000 billion dollars annually. This allows us to offer the client access to a series of products and prices that would not normally be negotiated. And it is not only the issue of offering it and executing it in the best possible way, but then accompanying them throughout the life of those products, because it is not only about being in the good times, but also in the mature ones.”

 

And looking to the future, is yours a sector in which many developments are expected, whether in services, in the way they are offered, or in the rise of other currencies for international business beyond the dollar-euro-pound? What could the yuan be like?

 

JQ: “I think our market is already quite unique in itself. Let us remember that it is the largest in the world. Only in currencies does it move more in a day than the Dow Jones moves in a year. It is a totally electronic market since its inception. 

 

As for currencies, euro-dollar-pound continue to be the three indisputable ones today, especially the dollar, but it is true that there are other currencies that are gaining more weight, just as others are losing it. The yuan? Well yes, I would pay a lot of attention to large emerging countries, such as India or China. And if we talk about China, a few years ago its currency was also liberalized, it has begun to form part of the IMF's basket of currencies. Since that moment its trading volume has increased greatly, making the overtaking to other currencies that previously had greater volume. There has even been talk of using the yuan as a currency to commodities like oil. These are ideas but today they are far from reality; "It would imply many changes of many kinds and today I don't see it."

 

Moneycorp is a company with a long history (it was founded in 1979). What milestones would you highlight in the company's history since it was established in Spain?

 

JQ: “Without a doubt the entry into profitability. We arrived here in 2017 and in 2019 we started making profits. That for any business is the milestone; From the moment you generate profits, there is a future, you are profitable and you see that there is a way forward.”