Currency volatility has caused more than $12 billion in Q1 2020, according to the latest Kyriba Currency Impact Report (CIR), a comprehensive report from the global leader of cloud treasury and finance solutions, which details the impact of foreign exchange (FX) among 1,200 multinational companies based in North America and Europe. This is a 37 percent increase from the previous quarter, with much of the impact coming from the consequences of the COVID-19 outbreak on the economy. The spike in currency volatility marks the sixth time in seven quarters that the quantified negative currency impacts have been more than $10 billion.
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“The Brazilian Real’s leap to the most impactful currency to North American companies demonstrates how challenging this period is for CFOs and treasurers”
“Multinational corporations simply can’t afford to lose revenue to currency volatility as the global economy contracts,” said Wolfgang Koester, Chief Evangelist for Kyriba. According to Koester, payments fraud risk is also a significant challenge to corporate governance and balance sheets, and will only increase under the current economic climate.
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Highlights from the Q1 2020 Currency Impact Report include:
- North American companies indicated the Brazilian Real as the most impactful currency, with 34 percent of companies referencing the currency in their Q1 earnings calls.
- The Euro was identified as the second most impactful currency for North American companies, snapping its twelve-quarter streak as the most impactful.
- The average earnings per share (EPS) impact reported by North American companies in Q1 2020 was $0.04 – four times greater than the industry standard MBO of less than $0.01 EPS impact.
- Healthcare equipment and supplies and the professional services industries experienced the greatest impact from currencies, as those industries started to be affected by the global pandemic.
“The Brazilian Real’s leap to the most impactful currency to North American companies demonstrates how challenging this period is for CFOs and treasurers,” said Koester. “We will continue to witness major depreciation until the global currency war subsides.”
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