Statistics Denmark has just released the balance-of-payments and foreign trade figures. In June, exports of goods and services rose to DKK 193.5 billion, while imports fell 0.7 percent to DKK 164.8 billion. Looking at the second quarter as a whole, exports climbed 5.7 percent and imports 6.9 percent. For the first half of the year combined, exports totaled DKK 1,102.8 billion, up from DKK 1,048.2 billion in the same period last year.

A shift toward Europe

The direction matters as much as the numbers themselves. Exports to the US fell 1.8 percent in the first half, squeezed by tariffs and weak American growth. Exports to the EU, on the other hand, have risen roughly 10 percent over the past year.

Germany stands out as a special case. Germany’s Federal Statistical Office (Statistisches Bundesamt) recorded a 3.7 percent rise in total German exports in the first half, while German exports to Denmark grew 8.1 percent to reach EUR 13 billion. That’s faster than the average growth rate for German exports to the EU as a whole, at 7.7 percent. German imports from Denmark rose 2.8 percent to EUR 7.7 billion. In other words, trade across the Danish-German border is growing fastest in the opposite direction from the overall trend.

But for your currency setup, direction doesn’t matter. The margin on currency exchange is volume-based, and it’s charged whether you’re sending money out or bringing it in. Trade between Denmark and Europe is growing in both directions. The number of currency exchanges follows suit.

Is your business also trading more internationally this year than last? Then it’s worth calculating what those extra exchanges are costing you.

The euro is the currency you stopped watching

If you trade with China or the US, you watch the exchange rate. You know it can swing, so you check it before trading, and you think carefully about timing.

The euro feels different. The krone is pegged to the euro through Denmark’s fixed exchange rate policy, the rate sits within a narrow band, and the odds of a sharp swing are close to zero. So most people don’t think of trading with Germany or the Netherlands as currency trading. These are nearby markets. Neighboring countries.

But a stable rate and a free exchange are two different things. Every time an amount moves from kroner to euros, the bank adds a margin on top of the market rate. It rarely shows up as a fee on the payment slip, because it isn’t a fee. It’s built into the rate you’re offered. And it’s charged whether the rate moves or stands still.

That’s the paradox. The exchange-rate risk is lowest with the euro, and so is the attention paid to it. But the margin isn’t calculated based on risk. It’s calculated based on volume.

A worked example for both exporters and importers

On paper, the margin seems negligible. But for the small and medium-sized enterprises (SMEs) that trade regularly abroad it turns into an amount you can feel on the bottom line.

15 payments a month at DKK 100,000 each add up to DKK 18 million in annual payments abroad. With a currency margin of 0.4 percent — typical terms at many banks — that’s DKK 72,000 a year. At 0.15 percent, the figure is only DKK 27,000. The difference is DKK 45,000. The exchange rate hasn’t moved an inch.

And the math works both ways. Buy goods in Germany, and you exchange kroner for euros. Sell into the eurozone and get paid in euros, and you exchange back to kroner. Two exchanges, two margins, same principle.

If your business sends DKK 18 million out and brings DKK 18 million in, the base is DKK 36 million. At 0.4 percent, that’s DKK 144,000 a year. At 0.15 percent, DKK 54,000. A difference of DKK 90,000 on trade with countries where you barely think about currency exchange being part of the equation.

Know your number before you negotiate it

The problem isn’t that the margin exists. The problem is that few people know their own.

That’s why we’ve put a calculator on our product page. Three questions – number of payments, typical payment size, and your current margin – and you get an estimate of your annual currency cost, along with how much capital is tied up in transit on average. If you don’t know your margin, the calculator uses an industry average.

The estimate is indicative, but it turns an invisible cost into a figure you can put in the spreadsheet when deciding whether you have the right currency setup.

Trade with Europe is growing. For the businesses affected, the number of exchanges is growing right along with it. It’s worth knowing what they cost.

Try the calculator here.