Supressed FX Volatility Dents European Corporates Competitiveness
(22 August 2023 – Europe) European corporates have been detrimentally impacted by lower FX market volatility in H1 2023 as the USD weakens steadily.
The EUR and GBP strengthening steadily against the USD has dented the competitiveness of European car manufacturers and other major exporters in particular.
Euromoney reports that the combined effect of reduced macroeconomic and cross-asset volatility since Q1 2023 was made evident according to data from earnings calls of 1,200 publicly-traded North American and European corporates. The collective quantified negative impact of currency movements was US$22.5 billion, a 25.5 percent decrease from Q4 2022 in Kyriba’s Currency Impact Report.
Among the top five most volatile G20 currencies in Q1 2023, the AUD and the KRW were ranked fourth and fifth, respectively. The South African rand was ranked third behind the Russian Ruble and Argentinian Peso, globally.
“Much of this disinflation has been down to easing supply chain issues and softening energy prices, meaning demand has been able to stay resilient even in the face of tighter policy, which has allowed broader risk appetite to stay firm” commented HSBC Head of European FX Research, Dominic Bunning.
“While the downward trend is substantial, we are by no means out of the woods regarding a very complicated and volatile currency market fuelled in large part by continued inflationary pressures, interest rate moves, and a general sense of uncertainty from a variety of geopolitical events” commented Kyriba SVP of FX Solutions and Advisory Services, Andy Gage.
“We are by no means out of the woods regarding a very complicated and volatile currency market fuelled in large part by continued inflationary pressures, interest rate moves and a general sense of uncertainty from a variety of geopolitical events” Gage added.
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