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10 Questions

with Martina Rubínová
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October 31st, 2007 issue

Jan Přerovský/THE PRAGUE POST
Director Martina Rubínová says CITCO puts its trust in its client base, not in the arrival of the euro.
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THE RUBÍNOVÁ FILE

Job title: Executive Director, CITCO Financial Markets
Age: 30
Nationality: Czech
Former position: Commercial Director, CITCO

Thanks to a plummeting U.S. dollar and the Czech Republic’s strong economic growth, the crown has been hitting record highs against the dollar and euro. This is not great news for local exporters, who face lower returns for their goods; the country’s largest exporter, Škoda Auto, lost more than 60 million euros (1.6 billion Kč/$86 million) last year solely to the stronger crown. One way of protecting against rising currencies is to use foreign exchange firms like CITCO. The company’s director, Martina Rubínová, talks to The Prague Post about euro adoption, the need to hedge against risk and why more Czechs should go overseas.
➊ Why should companies use foreign exchange firms like CITCO?
CITCO has been fully licensed by the central bank since 1998 for transactions in the foreign exchange markets and payment services. That’s our main business. We’re another option between the bank and the private sector. We give better rates and the opportunity to save some money. We do business in 12 currencies. Obviously, our clients are mostly exporters or importers.
➋ Why would an importer use your company over their bank?
If you’re an importer, for example, and importing shoes from Italy — that’s my favorite example — you need to pay for those shoes. And because your supplier is in Italy, he’s charging you euros. So you have the choice of converting your crowns straight through your bank, or you can use a financial institution like CITCO. You buy the euros from us and do the payment with us. There’s not only a rate difference but we also move faster than the bank. The bank takes two days for payment to get credited. We’re usually able to credit the supplier faster.
➌ How much has the crown’s appreciation hurt your exporter clients?
We allow our clients to hedge their needs for the future to protect against this rise. Once they know what their future contracts are, they can hedge funds with us. With a 5 percent commission, you fix the rate that’s on the market right now with us. Basically, you say, “Look, I have 50,000 euros and I want to sell them in crowns. I’m going to physically have those 50,000 euros next month but I like the rate you have today.” It’s no problem.
➍ Where do you expect the crown to go in the future?
When you look at the chart for this whole year, the crown has been strong throughout, and that’s not going to stop until we get the euro, which is still pretty far off. That’s what I expect. The dollar had trouble with mortgages over the summer and we see a lot of panic. Even if the market’s calm, we expect the crown to continue rising.
An important point is that there’s a psychological level of $1.45 to the euro. Our experts say that if we go over this rate there might be a negative impact on the euro. It could start worries in the eurozone and hurt the entire European economy.

➎ Is the crown still being used for any carry trading?

The crown has been used for carry trades during the past few months. Basically, in carry trading you take one currency and buy another, speculating on the interest rate differentials. Investors were lending low-interest crowns and Japanese yen and were buying high-interest currencies including the U.S. dollar.
With the U.S. mortgage crisis and the aversion to risk that came with it, we saw investors closing down the carry trades, so they were selling dollars and buying crowns. That’s part of why we saw the crown strengthen. With the expected rise of Czech interest rates in the future, the crown shouldn’t be used for carry trades anymore.
➏ Any currencies you’ve seen increasing in use?
We’ve seen a rise in demand for the zloty, Poland’s currency. With its size, there is much more to be imported from Poland.
➐ The government has said 2012 could be a possible date for euro adoption, which could be problematic for your company. What do you think of the state’s plans?
Obviously we’re in a business where we like the existing situation, without the euro. I’m a euroskeptic. We don’t worry too much about 2012, though for our business, it is important to look at what is happening and make plans. We want to continue specializing in what we do. We have more than 2,000 clients. We have their trust. When the euro comes, even if it comes earlier or later, we will still have this client base and we’ll build our future on that.
As for the government’s plans, what do you expect me to say? I don’t think the euro will make it by 2012. I see articles that say it’s still reachable but will depend on how we do financial reforms. Even though we had some reforms agreed upon this year, that doesn’t mean they will follow the expectations of the euro zone.
➑ You became executive director of CITCO at a relatively young age. Is this a trend you’ve seen throughout the country, with the need for Western-style managers?
First of all, I don’t think of myself as a young manager. I’ve been working since I was 18 years old. I’ve lived overseas and have a lot of experience with foreign companies. So I’m proud to say that I’m not a young manager. But we do see this quite a lot. All the companies need people. We do as well. And sometimes that 25-to-27-year-old generation — the ones right out of school — fits our needs exactly.
➒ You lived in Australia for several years. Do you think enough Czechs are going outside of Europe to study?
There was a boom of people studying overseas from 1996 to 1998. Then they came back. I know a few of them. Either they struggled, because they never adapted back to the culture and the country, or they became quite successful and happy.
These days, students don’t seem to go overseas as much. I see young people applying for jobs and they don’t have much experience overseas, other than being an au pair for a summer vacation. The government should care about this, education-wise. They should get people overseas and help them to do it. It’s tough, it’s not for everyone — but anyone can do it.
➓ As a woman in the male-dominated field of finance, have you encountered any sort of discrimination?
There have been times that I thought, “I don’t need this crap.” I have stories where I went to a business meeting and the client ignored me. They didn’t talk to me even though I was more senior than my partner. On the other hand, there are only a few people like that, and that happened more in the past. These days, I don’t feel it anymore.
Want your manager to answer our 10 Questions? Send a message to Paul Voosen at pvoosen@praguepost.com


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