Updated July 5, 2022 8:18 am ET / Original July 5, 2022 1:00 am ET
- Order Reprints
- Print Article
The dollar keeps getting stronger as the Federal Reserve’s inflation fight leads to higher U.S. interest rates and as geopolitical tensions drive investors to the haven currency. Add that to the list of challenges facing U.S. companies with sales abroad.
The U.S. Dollar Index (DXY) has jumped 9.5% so far this year, as of late Friday. The dollar’s appreciation eats into the profits of companies generating revenue overseas, as they have to convert sales in a local currency back into dollars. Some firms are already warning of the possible hit to their earnings from foreign exchange. In early June, Microsoft (ticker: MSFT)—which gets roughly half its sales abroad—cut its fourth-quarter profit and sales outlook, citing the dollar’s rise.