Currency Volatility


rating: +1+x

As the US dollar changes in value, this creates uncertainty in contract negotiations. If the dollar were to change after a contract was signed, then one party to the contract would lose out on gains and the other party would win. As a currency falls, exporters gain benefits, because domestic products look cheaper to foreigners; the opposite is true when a currency increases in value.

When a currency increases in value when compared to other currencies, then the domestic currency can buy cheaper inputs from other countries. If a steel plant news minerals from around the world, they can get cheaper minerals if the domestic currency increases in value relative to the place that sells the minerals. … "Currency Volatility" has a significant impact, so an analyst should put more weight into it. "Currency Volatility" is an easy qualitative factor to overcome, so the investment will not have to spend much time trying to overcome this issue.