Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How Recent Foreign Currency Fluctuations Affected Major Stocks

Companies / Company Chart Analysis May 12, 2016 - 12:26 PM GMT

By: Nicholas_Kitonyi


Investors can never shy away from the stock market because of the several benefits that come with investing in income generating assets. However, over the last few quarters, this market has been greatly affected by the non-income generating assets such as commodities and currencies.

Even the most popular stocks have not been spared in this case. Multinational companies listed on major exchanges such as the NYSE, NASDAQ  and the London Stock Exchange have been affected by global currency fluctuations as the USD, the GBP and JPY among other major currencies continue to fluctuate from one reporting quarter to the next.

Now, if you look at some of the world’s largest stocks by market capitalization. They have presence in virtually every region of the world. For instance, British Petroleum, BP Plc (BP) is present in Europe, Asia, America and Africa; where as Apple (AAPL) generates its sales from nearly every country in the world.

Under stable currency markets, it would be very easy to project sales for a particular quarter or financial year without much deviation from the actual results.  However, if global currencies remain, as volatile as they are, the chances of doing that drops to a bare minimum. If you take a look at the various currency exchange rates posted on various platforms such as, then you will get the clear picture just how rates can differ from one country to another.

Illustratively, when Apple reported its fiscal Q1 results, it noted that foreign exchange affected its top line to the tune of $5 billion. This is not a small number. Incidentally, Apple’s stock price has been falling in the recent past thanks to a squeezing top line as iPhone sales growth rate continues to decline.

At the moment, China accounts for at least 25% of Apple’s total revenue, which means that going forward; the company will continue to experience foreign exchange risk attached to its sales growth. Investors have not been kind enough to witness this as a macro-effect and have thus participated in driving the company’s stock price to new multi-month lows. As such, Apple as a major stock has been heavily affected by global currency fluctuations in a way that investors deem as an investment risk.

The trade-weighted USD index has gained 18 basis points over the last two years rising from 102 basis points to 118 basis points as of May 2 of this year. In January, the index hit 125 basis points. Again, this illustrates the level of volatility which multinational stocks especially those that do their reporting in USD terms have been exposed to in the last two years.

All company profits and sales are attached to a certain currency value and depending on how many countries a particular company operates in, it is bound to experience some gains/losses on foreign exchange translations when reporting quarterly and annual results.


In the case of Apple, the initial selling price for its products is quoted in USD. This means that as retailers put the products on their shelves, they will have to factor in the impact on sales based on the exchange rate for their local currency.  Some customers also take this very seriously when buying multinational products quoted in foreign currency.

As such, when Apple sells the product via its own stores globally quoted in USD, they are still affected because now, buyers must consider their decision to buy based on global currency fluctuations.

Therefore, the stock market cannot escape from the effects of foreign exchange, and fluctuations experienced over the last few quarters demonstrate just how unpredictable stocks can be when foreign exchange and currencies are not stable.

By Nicholas Kitonyi

Copyright © 2016 Nicholas Kitonyi - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in