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Argentex, a UK-listed specialist in managing foreign exchange risk, has become a casualty of market volatility sparked by US President Donald Trump’s trade war, with the company forced to suspend its shares after a rout in the dollar tore through currency markets.
The company, which trades on the UK’s junior stock exchange Aim, said on Tuesday that it had suffered a “rapid and significant impact on its near-term liquidity position” from margin calls on its currency derivative positions.
Argentex provides currency hedging and exchange services to a diverse set of clients, from big companies such as the FTSE 100 insurer Aviva to individual sportspeople.
The company calls itself a “global expert in currency risk management and alternative banking for businesses and financial institutions”. Its shares have risen 50 per cent this year as activity surged in the FX market, giving it a market value of just over £50mn.
This year has seen a dramatic reversal in currencies: the US dollar — widely expected to strengthen — has slumped, amid a broader loss of faith in American assets as investors focus on the potential economic damage from Trump’s tariffs on the world’s biggest economy.
The dollar is now down more than 9 per cent against a basket of its trading partners, while the euro — a primary beneficiary of the greenback’s decline — is up more than 10 per cent.
Argentex said that since its full-year results on April 2, and the subsequent investor roadshow, it had been hit by “significant volatility in foreign exchange rates, particularly in relation to the rapid devaluing of the US dollar against other major benchmark currencies”.
The company said it had “taken a number of steps to preserve cash and increase the collateral received from its counterparties”, and was “considering a number of options for the business”.
It said it had the support of its “principal liquidity provider” on how to strengthen its position, noting that it was likely to see continued pressure on its books of FX forwards and options, the types of derivatives used by investors to bet on or hedge movements in exchange rates.
The company was founded in 2012 and counts Pacific Investments, established by veteran financier Sir John Beckwith, as its largest shareholder.
“In the event that the volatility in currency markets worsens materially, then the company’s financial liquidity position, if not strengthened in the near term, would be significantly stretched,” said Argentex.
In its full-year results, the company had flagged “improving trading momentum” and said that higher FX volatility “generally acts as a tailwind for Argentex revenues”.
A spokesperson declined to comment beyond the stock exchange announcement.
