Juan Perez, Director of Trading at Monex USA, shares expert insights on hedging strategies, the shifting dominance of the US dollar, and the rise of emerging and frontier market currencies.
CHAPTERS:
00:00 – Introduction
01:06 – Juan Perez’s Career Path, Monex USA
04:45 – US Tariffs, Forex Volatility
09:38 – US Dollar, Gold Market
11:36 – Hedging Strategies for Treasurers
15:18 – Reducing Forex Exposure, Improving Margins
19:49 – Crypto Developments Overview
23:05 – Summary
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Episode Transcript:
Boris Agronovic, CEO at Global Risk Community
Hello, ladies and gentlemen, and welcome to our Risk Management Show podcast where we explore critical trends and strategies shaping risk, security and leadership. Today I’m your host, Boris Agronovic, founder and CEO at Global Risk Community, and our guest today is Juan Perez is a Senior Director of Trading at Monex USA, which is recognized repeatedly as a leading forecaster by Bloomberg.
So Juan, welcome to our Risk Management Show podcast today.
Juan Perez, Senior Director of Trading at Monex USA
Thank you so much for having me, Boris.
Host
Absolutely. It’s my pleasure. So Juan, I believe we will have a very thoughtful conversation on the topic of managing effects. Forex risk in an era of tariffs, volatility and policy divergence. But before that, Juan, could you tell us a short story about yourself, your career path and what you what brought you to where you are right now and what you guys at Monex USA up to these days?
Juan Perez
Well, so Monex USA is a multi global financial company that focuses on foreign exchange and payments. And we are North American, but we’re also located in Europe and in Singapore. I’ve been at Monex USA for what is now entering my 17th year. I started back in 2009 and you know obviously started in sales. The company was called Tempus Incorporated. It got taken over by Monex in 2011 and ever since then we have become a much bigger company because of FX payments. So now we are Monex Global.
My experience, really is all here at this company. So I’ve seen it grow from where it was to where it is today. For 17 years I’ve done everything from sales to also working very closely with operations and at the same time handling the trading desk for the past 10 years and currently I am a senior director of the team. But yeah, my background is in economics and I have an understanding of Latin America, having been born and raised there since I was a kid. But I’ve been in the in the United States for over 26 years. So you know, I have a global perspective and also a very American one, just from my education here in the US. Yeah. So Latin America is now in the news, so it’s very interesting how how it’s all the I think that’s why I’m here.
Host
Are you also from Venezuela or not?
Juan Perez
No, Sir. I’m actually, I was originally born in Colombia. I’m familiar with with the situation and and certainly understand the history and the repercussions that can come from, you know, intervention down there.
Host
Yeah, beautiful country. I’ve been to Colombia several times. Bogota, Medellin. Also this coffee region. Fantastic.
Juan Perez
Yeah, the coffee region is where I’m where my family and where I go. So when I go to Colombia, if you’ve been to the coffee access South of Medellin, because Medellin is a popular spot, but South of Medellin. Where the coffee comes from. So that’s that’s my area. That’s that’s that’s actually my area of expert. Cafe.
Host
Yeah, I remember. What are the major towns? Remind me.
Juan Perez
Well, so in the coffee axis, what you want to cover is the three cities. Manizales, which is a very Manizales. Then there’s Pereira, which is where Pereira also. That’s a city that never sleeps. It’s a lot of fun at night and throughout the day. And then there’s Armenia. Armenia is very important because after Cartagena, Armenia is the second most visited city because of the National Coffee Park, and that’s where you see a lot of the picturesque, you know, the pictures and videos of like horse riding and all of that. So it’s a very, very nice area. Fantastic.
Host
We have been there. I remember myself. Pereira and Mantusana. Yeah, Mantusana. Yeah. OK, let’s go back to our topic. So about tariffs, politics and the Forex volatility — US tariff negotiations have reintroduced uncertainly into into global markets. From your perspective, how are tariffs and political dynamics reshaping their foreign exchange markets right now?
Juan Perez
Well, the main thing to talk about tariffs is we have to understand that what this administration is doing is definitely a change from the norm. And in defining that a little bit, the status quo was that globalization was, you know, this idea of making sure that globally we’re all interconnected, that there’s comparative advantages if you’re able to do this.
You should focus on that and meanwhile trade with me. But the very globalized system and the very idea of free trade or fair trade has been scrutinized now more than ever before. So for decades we have become very accustomed to customers globally having all kinds of options, but there are repercussions to having such a world, and what you’re running into finally with globalization is you’re starting to realize that the biggest enemy of globalization as a concept in its execution, it’s actually nations, because national sovereignty, national interest, national regulations will really oversee the desire for global connectivity.
So what is ultimately happening, and you saw it in 2025, is you have this globalized financial system that is truly based on the idea that you have to have faith in the US dollar. It’s backed by the most respected central bank, the Federal Reserve, and of course an economy that seems to be growing and innovating often. So those things all together are starting to be questioned right now, and that’s why it reflected in the in the weakening of the US dollar.
So the US dollar in the first months of 2025 had the weakest six month run ever. What do I mean by that? In 1973, that’s when the dollar index was created and invented in order to track it next to a basket of currencies. And remember that this comes from a time when there were Portuguese escudos and Spanish pesetas, etc. So now that we have a world that is a little more easy to comprehend, do we also have alternatives? Is the European Union something to believe in? Is BRICS something to believe in when it comes to the the major raw material countries such as China, South Africa, Russia, Brazil coming together? So you’re finally starting to see major challenges and real physical challenges to the dominance of the US dollar based financial system.
You had the worst six month run since 1973 and then in the second-half of the year you had markets trying to cope with many, many changes that were done originally unilaterally and then as the year progress these tariffs, these things started to get negotiated and exemptions were starting to be given away. So what happened in the second-half of the year is actually a very small, very, very little recovery for the US dollar of about 1.1% overall, according to the Boomer Dollar Spot Index. What that means is we’re all very confused.
In the first six months of the year, there was the belief that we were going to have very, very pro-growth, pro-business policies and that would include the Federal Reserve cutting into interest rates. However, the economic evidence does not show that we are in a situation other than stagflation — which is low growth and stubborn inflation — we’re not in recession. So there’s no reason to think that the Federal Reserve needs to be stimulus driven. That’s in comparison to the rest of the world that has gotten ahead of us and has been more stimulating and more driven towards cutting interest rates. So overall tariffs and the unilateral moves.
The United States has created a lot of confusion because there are no long term guarantees anymore, which allows you to predict markets. That’s now being reflected in a highly volatile U.S. dollar that had the worst yearly performance since 2017.
So it all seems like it’s a lot happening at the same time, but it really boils down to a challenge to globalization from the very center core of that system, which is the United States. And that’s why you’re seeing the US dollar lose so much ground against dollar currencies.
Host
Yeah, great analysis. So you you mentioned that the dollar has been kind of falling against major currencies. Also gold has been on that very upward trajectory last year. It’s kind of an insurance premium for the kind of best asset, right? Because last time it was a U.S. Treasury. Now central banks want to take more gold instead of dollars and bonds over United States.
Juan Perez
So an interesting thing that you just said and I’ll throw this statistic for the listeners when it comes to U.S. dollar in what it represents in in the total global reserves back in 1999 it was around 70 to 75% of global reserves. At the moment we are at 57. So there there is such a thing as a change in mentality and the execution of how the central banks are looking at the dollar that instead of speculating over how it will behave, they’re already taking care of hedging by taking the one thing that historically has always been admired and respected by human beings, gold. So when it comes to the safe haven assets, the safe haven asset appeal of the United States has always been there for what we just mentioned.
It is the core center of the financial system after World War 2, so it makes sense to always hold U.S. dollars. You’re going to be invoice in U.S. dollars. You’re going to have to borrow in U.S. dollars. There’s always an appetite for U.S. dollars, but if all of a sudden it’s not seen as a safe haven asset or the most reliable thing that you can have.
Then you start looking for alternatives. And it’s interesting how gold is going back to being a very, very appreciated asset.
Host
Yeah, yeah. So what do you think treasuries should work on this?
Juan Perez
Because many treasuries still rely on the relatively passive hedging approaches.
And why is now the right time to revisit those strategies and how can overlay hedge and help companies better manage uncertainty? The thing is this, so you know, in the world of foreign exchange, in the world that we participate in.
I’ll explain simply, but there’s two P’s, right. So most of our clients and and treasurers, what they’re looking for is they’re trying to protect themselves, right. The first P is protection. How do I protect myself from the wilderness and the risk that exists within the FX market?
So you know through that what you do is you buy on the spot because you have to make payments that are due the next day or two days. So at that point you’re just at the mercy of what that day the market tells you, right. But the way to do it is you have to be able to do the math and see what you can handle. So you need to do forward contract hedging. You need to look at balance sheet hedging. People look at what is the current rate of exchange, but more importantly, mathematically, what is the exchange rate that matters to you the most? So you have to do an equation and say what is the take profit. So the take profit would be a desirable strike price. What would be an ideal rate of exchange that is?
Hey, you know that if it improves and it’s in my favor, I would like to have this company buy automatically for me. Or the other way, which is the more important part is you look at your stop loss. You say, hey, what is the worst scenario? What is the one currency rate that if it reaches that level, I’m not going to be in a good situation. So the stop loss/take profit is something that we have seen people use tremendously because short term and long term forecasting have been hurt. And remember, we just came from the longest government shutdown in U.S. history, which hurt visibility, transparency and analysis for 7 to 8 weeks and now people are still.
So because it’s so hard to really pinpoint where things are going, it is important to know and prepare yourself for what is mathematically where I don’t want, where is my limit? And you can set that with us and then know that automatically you’re going to get something that’s going to be either favorable or you’re going to get rid of exchange. That is the one that you can handle and you’re not going to run any further risk. So that’s protection.
The other P — and we’re seeing this because companies that have really good cash management, but more importantly that they’re able to take a little bit more risk –- that’s called participation. So participating within the FX market means that you do have to make payments, you do have to, you do have needs, you do have things scheduled, but you’re trying to see if based on a structure and based on an option, there is a way for you to get some premium and there is a way for you to take advantage and be given a rate of exchange down the line that is better if certain terms hit. This kind of is a little bit. Sort of like equivalent to when you do a multiple leg parle, right? So protection, very important. It’s very hard right now because treasurers tend to like models and reliable precedent and patterns, but at the moment we’re in the midst of major transition and chaos. So we have to really roll with the punches. But if you’re able to take on the volatility and you have the cash management, then one of the things that you can do is do options and look at structures and see how you can perhaps get benefit from that.
Host
All right. So you described option is important and take a volatility kind of in the in the attention and the mathematics and all this. I used to be also risk management manager in the bank. I know this kind of formulas and although I have not been a trader myself, but I kind of supervise the trader. So Forex is one of the trickiest one when we had back when we had some hundreds of currencies like Deutsche Mark and Nether Dodge Gilden, it was now it was not like this time, but what practical actions can businesses take today to reduce their forex exposure and protect or even improve margins for for their P&L?
Juan Perez
Well, you know, when it comes to P&L I know obviously one of the major difficult things right now is pricing. So when it comes to your pricing equation, obviously if you’re in international business, the main thing that you have to concentrate on is what is your net landing cost. So the net landing cost is when you take into account everything from duties.
To the specifics of that country. And then you add what has been introduced by the United States, which is tariffs, right? And the tariff schedule has been very idiosyncratic and very particular. So it has created tremendous difficulty. What I would say more than ever before, and this is really the salesperson in me talking, is you really, really have to have very serious conversations with your overseas vendors. More importantly, one of the trends that we have seen recently is so for example, a lot of these emerging markets or let’s say a lot of companies like ours that maybe needed to send euro to Europe, but over to the Philippines, they would not send Philippine peso, right? It was not something that they understood, or it didn’t seem like there was an interest from people in the Philippines to receive Philippine peso as payment and say just send me American dollar. That’s changed dramatically.
More than ever before, I’ve had to pay attention to rates of exchange when it comes to not only just emerging market currencies, but pay attention to frontier currencies. I’ll give you examples. Vietnamese Dong falls in the frontier, PKR, Pakistani rupee. Remember that India has already become very well known for manufacturing and even some services, especially anything that’s English driven, but some of that has because of the success, some of that has actually dipped over to Pakistan. And again, not the easiest country to deal with, but PKR is one of the solutions that we’ve now added for treasury because they were like, hey, we have to send money to this country, for example, Uganda, Ugandan shilling. You know, I wouldn’t have imagined in my career studying economics that I was going to need to understand Uganda, but these countries, and I would say if you want to look at from a hemispheric way.
Countries in the southern hemisphere and certainly the manufacturing hub in Southeast Asia, typically and until 2025, they were more than elated to receive U.S. dollar payments. Now they want to know and they want to receive in their own local, which is why a company like ours becomes imperative in how you plan and do this because there is such a way that you and there is such a thing that U.S. dollar payments are not only not convenient and not desirable, but then that you end up having an advantage by actually doing it in the local currency of the vendors that is asking you for it.
So I think, more than ever before, instead of just looking at your margins of profit and of course you want to, you know, do as much Excel math as possible. What you really do want to comprehend is if they were asking for a particular currency before and they’re not asking for it now, why is that? And if you weren’t aware before of all of these other frontier currencies that you can actually very smoothly and easily make payments and transport, and this is the time to start looking into the global world.
So earlier I said, you know, globalization has kind of a bit of friction with national interest. But right now, no matter what, when it comes to payments, everybody wants to get paid. And one thing that has changed is the mentality of getting paid only in U.S. dollars or primarily U.S. dollars. So now all of these other currencies are signed to prop up as important.
All right. So how about the kind of crypto development? Because so that stable coins kind of become very important in this area. So again, and I’m going to be very, very transparent here for me as as a trader that is of, you know, the currencies backed by government, central banks, interest rate differentials, that’s my world. Crypto isn’t something that I actively trade and it’s not part of my daily professional task, but it is something that now as a company, we’re starting to entertain and have conversations with clients and prospects about how stable coins can make things easier.
When it comes to the SWIFT system and how things are delivered, we’re running into more challenges now more than ever before, which is China wants to have faster and quicker liquidity and it wants to internationalize that. So you’re actually seeing stable coins in that digital platform. I think it’s going to call, man, I forget the name at the moment, but it might be M Bridge or something like that, but or M Pay, but the idea is that it is kind of like that Chinese organized SWIFT system for Thailand, for these other big, big, big countries. Now the reason for that is because in terms of, you know, you’re briefly touching on it, but there’s so much to talk about when it comes to this because there is criticism on on the against the United States a little bit that we’ve been a little bit too late on jumping on the stable coin and digitalization of of USR and and we’ve kind of focused more on like giving a lot of now regulatory leeway to the the rare stuff and again, stuff that’s not necessarily backed by stable coins or pegged to a central bank.
So for us it’s a learning moment, but it is something that is finally being very much included in the conversation of FX solutions. And the main reason for that is because the biggest demand out there is how soon can I receive the money? How soon can I get confirmation of delivery? And that’s because right now, Boris, if I wanted to Venmo use something, you would have the money right away. And if I in one of the craziest things, again, you know, full transparency here, I’m speaking as Juan Perez as a person. I have found it amazing that we live in an age where if you use Gemini wallet or any other type of Bitcoin or crypto thing. You literally switch these things from whatever it is to a dollar and it’s unbelievable. So we’re starting to come to become more aware of this, but in our world, right, because we are in the foreign exchange central bank dictated world SWIFT system.
We are not trying to deviate and jump into other things and we typically we are not supportive and we are not typically working together with entities that are taking a lot of crypto risk. But one of the things that we’re becoming more comfortable with is hearing about Tether and USD and all of these stable coins because these things are actually more manageable and again, regulatory changes have made it so that it’s a little bit less of a risk for companies like us.
Host
Fantastic. So Juan, let’s summarize our interview for someone who is listening and would like to walk away with one or two major takeaways. What would that be?
Juan Perez
Well, so you know, one major take away is we have to really, really understand that we’re living in a in a crucial moment for the dominance and superiority of the US dollar. You know, I’m 39 years old. I grew up in a world that has been very much managed and dictated by the US dollar value against everything else. Now more than ever, if you’re United States based, if you have become accustomed to paying people in U.S. dollars, that is starting to change. So you may want to contact a company like ours to guide you and to work together with you.
That’s a major take away on the other part, I think because of technology. I feel that governments need to at some point meet the technological advancement and start helping people out. So I think what you’re going to start seeing this year is you’re going to start seeing in the European Union, in China, and here in the United States, ways to integrate the economy a little bit different and that’s going to change the way that we think about employment, that’s going to be change the way that we think about progress and productivity.
So we’re kind of in the midst of, I wouldn’t say like a new Industrial Revolution type thing, but we’re in the midst of a major, major change and I think when you speak about it mathematically, every 25 years, we’re in 2025, 2026. It makes sense that every quarter century something major happens and we’re in the midst of it.
Host
Yeah, fantastic. Thanks again. It was very, very kind of very interesting for me as a professional for risk management also kind of for a geopolitical kind of person who kind of almost watches always watches the news.
I wish you a great success to you and your company and hope we will cooperate in the in the future on other topics.
Juan Perez
Well, I really appreciate you being on your podcast Boris, and again you know Monex USA, we’re available for any questions. I’m usually one of the front people on the website that.
You know, if you have any questions about what’s going on, we’re not unreachable. We want to hear from you. So absolutely we’re very welcoming. And I think during a time when, again, there’s so much transition, there’s so much uncertainty, we’re just another arrow in your quiver.
