For companies that sell abroad, exchange rates can matter as much as demand. A currency move can turn a profitable contract into a loss-making one before the goods are even shipped.
Price and competitiveness
A weaker home currency makes exports cheaper abroad; a stronger one makes them more expensive.
Margin effects
Companies that buy inputs in one currency and sell in another face exposure on both sides.
Hedging
Forward contracts and natural hedges, such as matching costs and revenues in the same currency, reduce uncertainty.
Key takeaways
- Price and competitiveness
- Margin effects
- Hedging
