Currency headwinds cost companies $11bn

Corporates in North America and Europe lost nearly $11 billion as a result of currency headwinds in the third quarter of 2016, according to the latest impact report from Fireapps, a specialist in currency analytics.

The firm's analysis of the earning calls of 1,200 publicly traded companies in both regions showed 263 reported a negative currency impact. More businesses in North America reported negative effects of currencies (218) than their European counterparts (45) in Q3 2016.

For the companies that did quantify those currency headwinds, $6.81 billion was reported in North America and $3.86 billion was reported in Europe over that time period. The combined $10.67 billion is a near 56% difference from the total of $24.02 billion reported for the corresponding period in 2015.

Sterling hit

Unsurprisingly, the pound had the most impact on businesses in North America, with 58.3% of companies mentioning it, and Europe (for 36.8% of firms).

Sterling experienced significant losses against the dollar and the euro since the UK voted to leave the European Union in June 2016. The pound dropped from just below $1.50 to nearly touch the $1.20 level by January this year, as uncertainty over the effect of Brexit continued to weigh on the currency.

Against this backdrop, a so-called flash crash sent sterling tumbling by more than 6% against the dollar in October – a temporary occurrence, which a January report from the Bank for International Settlements found was caused by a confluence of factors, including activity from less experienced traders and loss of data from public venues.