At a time when the global economy is slowing and trade wars are raging, currency volatility is a critical way companies are losing ground to their competitors.
Foreign exchange losses cost companies in North America and Mexico more than $44 billion in the first half of 2019, according to Kyriba’s FiREapps.
“CFOs who dismissed this problem as a temporary wave of market drama need to reconsider their approach. They need to adopt modern tools to measure, monitor and manage their currency exposures accurately and in real time, or risk facing more quarters of substantial losses,” chief evangelist and global head, Financial Institutions for Kyriba, Wolfgang Koester, said in a statement.
The role of the corporate finance department has never been more vital, as multinationals try to navigate these challenging times, he added. The pressure is being felt by CFOs, who are called upon to accelerate growth despite these challenges, he says. The ability to know where your cash is has never been more critical, he adds.
San Diego, California-based Kyriba has developed a cloud platform to help CFOs and their teams to activate and protect their global cash and liquidity to achieve better financial outcomes.
The euro has repeatedly topped the list as the currency most mentioned in corporate earnings calls as having a negative impact on corporate results. Other volatile currencies in the past year included the dollar, the renminbi, the Brazilian real, the Turkish lira and the South Korean won.
Fluctuations in foreign exchange rates affect a multinational company’s financial position, as well as its competitive position in the global marketplace. One of the main goals of FX hedging by corporate treasuries is to reduce earnings volatility.
With these Corporate FX awards, Global Finance honors those companies (globally and in seven regions) that have successfully protected their profit margins, cash flows, balance sheets and global competitiveness by expertly managing their currency exposures. The main objective is to minimize losses, not to seek profit from currency trading. This year, corporate honorees were chosen in 11 industry sectors and, for the first time, in 10 new global categories.
