Recently, Nicholas C. Fanandakis, CFO of E.I. du Pont de Nemours1 made a comment on the operating environment his company faces—which we think reflects what many CFOs across America are feeling:
“The global currency markets have recently experienced significant volatility and a meaningful strengthening of the dollar against a broad basket of currencies that we operate in. This has created a significant headwind for DuPont’s expected outlook for 2015.”2
While U.S. exporters are taking a hit from the strong dollar, international exporters (in the eurozone and Japan in particular) are on the other side of this trade—and benefiting.
The Impact of Currency on Exporters—U.S., Europe, Japan
The analysis below shows how the performance of U.S. exporters3 compares to exporters from Japan and Europe. The analysis is clear: U.S. exporters are significantly lagging Japanese and eurozone exporters over each of the periods analyzed over the last year—a period marked by significant dollar strength.
Exporter Performance Comparison
• Japan Benefited the Most over the Full Year – Since the start of “Abenomics,” the yen has weakened more than 29% against the U.S. dollar, which has helped drive profits for many Japanese exporters.4 Toyota Motors5, Japan’s largest exporter, recently announced a continuation of this trend by reporting, “Operating income increased by 258.8 billion yen. Major factors contributing to the increase included currency fluctuations of 215.0 billion yen and cost reduction efforts of 200.0 billion yen.”6