US-based multinationals set to face much more pain from strong greenback
Currency's surging value is hurting results at firms with big sales abroad; there is even talk of an earnings recession
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THE surging value of the US dollar may be posing the biggest threat to US corporate earnings since the 2008 financial crisis, hurting results at most US-based multinationals. Some on Wall Street are even talking about an earnings recession.
The US dollar's gain of 22 per cent in the past 12 months against a basket of major currencies has landed a double whammy on US companies with big sales abroad. Revenue and earnings from foreign markets are worth less when translated into greenbacks and their costs become relatively less competitive against rivals producing in countries with declining currencies.
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