Currency exchange rates leave companies $22.5B poorer – CFO Dive

Dive Brief:

• North American and European companies lost $22.5 billion in the second quarter because of the negative impact of currency exchange rates, according to the Kyriba Currency Impact Report.
• The findings mark the third consecutive quarter of losses of $20 billion or more, the longest streak tracked in the report in more than a decade.
• Trade tensions between the U.S. and China, as well as the uncertainty over Brexit, could lead to more losses.

Dive Insight:

“Currency volatility is having real, quantifiable consequences for companies,” Wolfgang Koester, chief evangelist at Kyriba, said in a statement. “CFOs who dismissed this problem as a temporary wave of market drama need to reconsider their approach.”

According to the findings, 316 companies — 291 in North America and 25 in Europe — reported negative currency impacts.

In North America — the U.S., Canada, and Mexico — companies were hit with $21 billion in negative impacts. In Europe, companies lost $1.5 billion.

Other findings:​

• The euro was mentioned as the most impactful currency by North American companies for the 10th consecutive quarter, with nearly half of companies mentioning it during Q2 2019 earnings calls.
• The combination of the currency war between the U.S. and China and Brexit uncertainty has led to a record period of currency volatility.
• As long as U.S. and China issues and Brexit remain unresolved, impacts are expected to continue into Q4.

“At a time when the economy is slowing down, currency volatility is one way companies are losing ground to their competitors,” the report said.