Currency devaluation ‘could hurt European firms’

<p>European companies could be damaged if currencies are devalued quickly.</p>

A swift devaluation of currencies could prove to be damaging to companies across Europe.

This is the view of Christian Stocker, equity strategist at UniCredit, who explained firms will be able to cope as long as currency values do not depreciate too quickly.

Speaking to Reuters, he explained that if the process is sudden and fast this is where it is likely problems could arise for European companies.

Mr Stocker pointed out that the speed of the recent devaluations was "extreme", adding: "There is a high risk that these could get reflected in the third quarter earnings."

The Indian rupee has been particularly week in recent weeks and the currency has regularly hit a new record low when compared to the US dollar.

However, Chris Towner, director of FX Advisory Services at foreign currency exchange brokers HiFX, suggested this could prove to be good for the Indian economy in the long run.

Find out about commodities trading and learn CFD strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.