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Survey: North American CFOs Concerned About Currency Headwinds

Currency concerns, such as a strengthening US dollar, have increased for finance heads at large North American companies in Q1 2015, according to the Deloitte CFO Signals survey.

More than half of the 100 chief financial officers (CFOs) polled report significant changes in their geographic focus and approaches to managing currency risks.

Shifts in geographic focus are relatively common, with CFOs indicating a higher focus on North America, China, and emerging markets, and a lower focus on Europe. Nearly 28% of CFOs say they are decreasing their focus on European markets, and only 16% are increasing it.

In addition, nearly 35% of CFOs indicated a lower exposure to the euro, and there was an even split between companies increasing and decreasing their debt levels.

The strength of the US dollar became a top concern this quarter, spurring some finance heads into action. “While a substantial proportion of CFOs say they do not have significant currency exposure, quite a few report becoming more deliberate about their hedging strategies,” says the report.

For example, several companies that have not previously managed currency risks said they are now looking at options to do so.

According to the research, CFOs from the most geographically-diversified companies tended to cite reliance on natural operating hedges – especially on using their revenue/expense mix – to limit exposure to currency fluctuations. These companies also tended to cite active management of transactional exposure, and also some use of synthetic approaches for managing operational exposure.

On the other hand, CFOs from less-dispersed companies tended to cite use of debt management and financial instruments for managing currency exposure.

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