North American industries most affected by currency exposure were professional services, biotech and pharmaceuticals, machinery, trading and distribution, chemicals and health equipment and supplies.
Rising interest rates and continuing foreign exchange (FX) volatility are proving themselves a headache for treasurers and CFOs.
According to treasury software provider Kyriba, companies based in North America and Europe felt the sting in the fourth quarter of 2022 as macroeconomic events and FX exposure cost them roughly $30.22 billion in lost earnings and cash flow, against just $1.99 billion in gains.
Kyriba studied 1,200 multinational companies, each with at least 15% of their revenue coming from overseas. Companies based in North America reported $28.9 billion in FX-related losses, up 84% from 2021, while gains amounted to $590 million, up just $330,000 from the previous quarter. Companies headquartered in the EU reported $1.28 billion in losses.
The average earnings-per-share impact reported by publicly traded North American companies from forex headwinds in the fourth quarter was $0.05, up $0.01 year over year.
Publicly traded North American companies mostly blamed the euro, with 33.3% of companies referencing it as affecting revenue. The Canadian dollar ranked second, at 26.7%; while the Japanese yen came third, with 20% of North American companies identifying it as having an impact.
North American industries most affected by currency exposure were professional services, biotech and pharmaceuticals, machinery, trading and distribution, chemicals and health equipment and supplies.
“If the currency markets have taught us anything in the past few years, it is that we never know when or where the next currency crisis will come from,” says Kyriba senior vice president Andy Gage. He cites Russia’s war in Ukraine, the US debt-ceiling negotiations and the upcoming election cycle as macroeconomic and geopolitical challenges that could make an already bad situation worse.
“There are numerous market dynamics that could cause increased volatility and uncertainty in the currency markets, so CFOs and treasurers need to stay vigilant,” he adds.
