'Time To Hedge?'Asks Sullivan
Updated: 7th March 2008
'Time To Hedge?'Asks Sullivan
Turmoil in the currency markets is having serious consequences for many businesses, not least German car manufacturer VW, who, as was reported in the media yesterday, is likely to remain lossmaking in the US as long as the dollar remains at its current level against the increasingly strong euro.
The issue of currency fluctuation is a serious one for any business involved in international trade. ECB president Jean-Claude Trichet has warned that the euro could continue to rise, potentially reaching an unprecedented and dangerously high level of 1.60, further compounding the issue experienced by VW for any European manufacturers of goods and products that is selling in the deflated US market.
Mark O’Sullivan, director, dealing at Currencies Direct comments, “With the US on the brink of recession, the concern for many European businesses is that the strong euro will only make exported goods a far less attractive proposition. High value items such as cars will become even more expensive to US consumers, as dealers are forced into passing on the significant cost of currency exchange to consumers.”
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