Do Exchange Rates Matter?
This report was co-authored by Eliza Winger.
Corporations operating in the global marketplace react to and manage exchange rate volatility. At the suggestion of former Federal Reserve Chairman Paul Volcker, The Conference Board and the Group of Thirty undertook a survey to better understand:
- businesses’ attitudes toward exchange rate volatility;
- the impact of exchange rates on companies’ business decisions and competitive position; and
- actions businesses take to mitigate and manage exchange rate risks.
The survey queried 2600 nonfinancial publicly traded companies from around the world, with responses from the CEOs and CFOs in nearly 400 businesses in 38 countries. This unique report provides deep insights into whether -- and how -- exchange rate volatility shapes business investment decisions and risk management practices, including differences among different global regions. It indicates that many important economic effects of exchange rate volatility may come not only from the direct macroeconomic impact of this volatility on countries’ economic performance but also from the incentives that companies have to narrow their exchange rate risk by limiting the number of currencies in which they deal and/or abandoning their home currency in favor of a multinational medium of exchange like the dollar and/or the euro.
- Letter From the Project Chair
- Is Exchange Rate Volatility aNecessary Evil?
- About the Survey Sample
- How Global Businesses Manage Exchange Rate Risk
- Managing Exchange Rate Risk as a Strategic Competitive Advantage
- Lessons from Europeand a Common Currency
- The Special Case ofJapan
- Implications for Exchange Rate Policy
- Key Findings from the survey which queried 2600 nonfinancial publicly traded companies from around the world, with responses from the CEOs and CFOs in nearly 400 businesses in 38 countries
- The Survey Questionnaire
- Forty Charts