Trump can be useful for Finnish export companies

of the United States the noticeable strengthening of the dollar in relation to the common currency against the euro improves the results of many Finnish export companies.

When the income of products and services sold in dollars is converted to euros in the income statement, due to the stronger dollar, they are higher in euro terms than before.

“The strengthening of the dollar will benefit mainly machine shops and the forest industry, but especially Neste from individual companies. The effect of the strengthening of the dollar can even be significant on the results of certain companies”, says the chief analyst of the financial group OP Antti Saari.

The oil refining company Neste is exposed to changes in exchange rates. Most of its sales are priced in US dollars, while operating costs are mainly recorded in euros, except for the purchase of raw materials.

The dollar has strengthened by more than six percent in relation to the euro since the November 5 presidential election in the United States.

It is a fairly significant change in currencies.

In short over time, it is mainly a matter of computational benefit. Careful investors tend to pay attention to the development of turnover and operating profit without the effect of exchange rates.

“If the dollar stays very strong for longer, it will be more beneficial for export companies that trade in dollars. In addition, it must be taken into account that the strengthening of the dollar will soften the next president Donald Trump’s negative effects of the announced import duties”, says Saari.

Trump plans to impose 20 percent import tariffs on all foreign products and 60 percent tariffs on Chinese products.

The central goals of Trump’s economic policy are to put the interests of the United States before everything else. The purpose of tariffs is to protect US production from international competition.

Key According to Saari, the reason for the strengthening of the US currency is that, after the presidential election, the outlook for the US economy compared to Europe has improved and the interest rate cut expectations of the central bank have moderated.

In addition, Trump has promised tax cuts and regulatory easing for companies. This is likely one reason why investors have moved capital into dollar-denominated securities.

“It is quite clear that the strengthening of the dollar increases the income of many Finnish export companies when they are converted from dollars to euros. In addition, the competitiveness of Finnish companies improves when it comes to products transported to the United States and not manufactured there,” says the financial company Nordea’s asset management strategist Dear Alava.

However, Alava points out that many companies report the effect of exchange rates in their interim reports.

“Exchange rates are always changing. Therefore, it is essential to look at how the result changes without their influence, because it gives a better understanding of the development of the business.”