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Showing posts from July, 2022

The Extra Strong Dollar: What that means for MNCs

 On July 12th, something unprecedented happened. The Euro reached parity with the US Dollar, meaning that 1 Euro is now worth 1 Dollar. For the 20 or so years the Euro has been around, it has never reached parity with the Dollar, but now that has changed. One reason why this has occurred is because the Federal Reserve has been steadily increasing interest rates in the US in order to combat inflation, while Europe has remained inactive in comparison. Another issue is that the ongoing Russian invasion of Ukraine has caused mass capital investment flight out of European markets & into American ones, increasing demand for Dollars and pushing up its value, thus making it stronger relative to the Euro. This stronger dollar has its advantages and disadvantages. A key disadvantage for multinational companies is that big currency fluctuations can have a significant impact on profitability. American companies with large international footholds will take a hit from converting their foreign sa