Thought Leadership Courtesy of FiREapps

For treasurers and foreign currency traders, a major reckoning is at hand—a mix of volatility caused by the confluence of persistent global recession, financial crisis, active currency management and competitive devaluation and, in the eurozone, unsustainable monetary integration without fiscal restraint.

‘How can treasurers effectively hedge against currency risk?’ The perennial question is particularly pressing at the moment, given the results of FiREapps’ latest quarterly research report on the impact of currency fluctuations on corporate earnings. In Q312 corporate leaders, analysts and investors alike were surprised that earnings reports reflected significant currency-related losses. This was because they had been focused on the euro and, seeing the dollar weaken relative to it, they expected currency-related gains (dollar down, revenues up). In fact across a subset of Fortune 2000 companies reporting negative currency impact, the aggregate top-line losses totaled US$22.7bn.