Currency hit to North American companies' results stays above $20 billion

FILE PHOTO: A man counts U.S. dollars in Tehran, Iran July 7, 2019. Nazanin Tabatabaee/ WANA (West Asia News Agency) via REUTERS

NEW YORK (Reuters) - The negative effect of currency fluctuations on North American companies’ second-quarter results eased slightly from the preceding quarter but remained at a historically elevated level, according to data from treasury and financial management firm Kyriba on Thursday.

The collective exchange rate impact, including on companies in the United States, Canada and Mexico, was $21.01 billion, Kyriba said in a report.

This was less than the $23.39 billion negative effect in the first quarter, but marks the third straight quarter that the hit has totaled more than $20 billion, the longest such streak in more than a decade.

“What’s interesting about this is we continue to have this trend of north of $20 billion three quarters in a row. We have not seen that since we started this research in 2008-09,” Wolfgang Koester, senior strategy officer of Kyriba, said.

“We’ve also never had a $44 billion loss for the start of a year since we’ve been reporting it.”

Kyriba, which acquired currency risk consulting firm FIREapps earlier this year, said 291 North American companies reported negative currency impacts in the second quarter, roughly the same as in recent quarters.

A stronger dollar can hurt large U.S. companies that derive much of their revenue from abroad as they repatriate foreign earnings.

At the end of the second quarter, the U.S. dollar had risen nearly 3% against the euro from a year earlier. EUR=

Investors have favored the dollar for many months, thanks to relatively high U.S. interest rates and a strong economy.

Reporting by Caroline Valetkevitch; Additional reporting by Saqib Iqbal Ahmed; Editing by Richard Chang