Taking care of currency conversions is an essential job for an international market researcher and I’ve written about the process before. The US dollar keeps rising, making the value of spending in local measurements far in excess of current dollar value growth. As I begin to tackle the Q3 market I note that the changes have been even deeper than before. The Figure shows the growth of the $US against the deepest fallers for Q3 2015 v Q3 2014. China decided to lower its exchange rates recently, but remained one of the most stable. It’s interesting that some of the steepest falls have been in oil-rich countries, which are struggling to meet GDP targets due to sustained low prices.
The Figure shows the changes in the quarterly value of the $US against 5 leading currencies in the period from Q1 2008. It shows how the Pound and the Rouble used devaluation to help their economies in the aftermath of the Credit Crunch. It also shows how Japan did the same in 2013. China has held its currency at higher values until the latest quarter.
Costa Rica, EL Salvador and Guatemala were the only currencies that gained value against the dollar in the quarter – and only by very small amounts.
These dramatic changes create nightmares for global suppliers in the IT and Communications market. In general I’d advise them to do their sums carefully and remember that local growth is king. Expenses are also lower, so you might want to consider building new data and research centres to reinforce the local business.