US multinationals grapple with soaring dollar

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The rapid rise of the US dollar since the start of the year is a double-edged sword for American multinational companies, pushing some of them to decide whether to hedge or reposition their activities abroad to avoid fallout.

For an importer, the surge in the green-back against the Euro, yen or British pound is a plus, because it makes the products they buy cheaper.

But for a US export company, products sold in dollars have become more expensive, which increases the risk of losing clients and seeing sales decline.

And they also lose money when converting foreign revenue back into to dollars. Many firms already revised their earnings forecasts for the year to account for the changing exchange rate, including computing giant Microsoft, which warned its quarterly sales will fall by $460 million and its net profit by $250 million due to the currency hit.— AFP

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