NEW YORK: A strong US dollar has dragged on corporate bottom lines for North American firms in the first quarter of this year, hitting earnings three times harder than the prior period.

The blow to companies’ profits from currency swings totalled US$8.4bil in the first three months of 2024.

That was up more than 200% compared to the fourth quarter, according to a report released by corporate treasury management company Kyriba Corp.

A Bloomberg gauge of the dollar rose nearly 3% between January and March as traders pared back aggressive bets that the Federal Reserve (Fed) would ease interest rates, surprising many market watchers who entered the year wagering on greenback weakness.

That ate into profits for companies that trade in goods and services overseas.

“We knew this was a strong likelihood, given the dollar was unexpectedly strong,” Andy Gage, senior vice-president of foreign exchange solutions and advisory services at Kyriba, said.

“Maybe companies thought they were out of the strong dollar cycle. They were looking at the Fed.”

Many US multinationals doing business abroad find their profit inversely tied to the value of the dollar, since a strong domestic currency weighs on foreign sales.

 - Bloomberg